The government has promulgated the Income Tax Amendment Ordinance, 2021 tochange the dates for the extension of the tax amnesty scheme for theconstruction sector.

The Income Tax Amendment Ordinance 2021 has amended the relevant provisionsof the Income Tax Ordinance, 2001 to extend the deadlines for thedevelopers and builders seeking immunity from the probing of their sourceof funds, availing fixed tax regimes, and the last date for the completionof projects.——————————

The Federal Board of Revenue (FBR) has also amended the rules for thecomputation of the profits and gains of the builders and developers and thetax payable thereon.

Through this ordinance, the income computed and tax payable will be on aproject-to-project basis which will be computed and paid at the specifiedrates.

The estimated project life for tax purposes will not exceed three and ahalf years.

According to the ordinance, in the case of the existing incompleteprojects, the estimated project life will be treated as four years maximumfrom the tax year 2020 through the tax year 2023, and the tax payable willbe reduced by the percentage of the completion up to the last day of theaccounting period pertaining to either the tax year 2019 or the tax year2020 as declared in the registration form.

Under the ordinance, the deadline for the builders and developers to seekimmunity from the probes into their source of funds and for availing thefixed tax regime has been extended from 31 December 2020 to 30 June 2021.The deadline for the builders and developers to avail of the fixed taxregime has also been extended from 31 December 2020 to 31 December 2021.

Similarly, the deadline for the completion of projects has been extendedfrom 31 September 2022 to 30 September 2023, and the deadline for thebuyers of housing units and plots has been extended from 30 September 2022to 30 March 2023 under the ordinance.

The Income Tax Amendment Ordinance, 2021 has also amended the registrationand filing of returns by the builders and developers.——————————

Under the revised procedure, a builder or developer is required to registera project electronically on the IRIS through the FBR website either on orbefore 31 December 2021.

Additionally, when the benefit of sub-section 3 of section 100D is requiredto be claimed by a developer or builder, the project in question will haveto be registered by 30 June 2021 at the latest.

A tax expert said that the benefit of sub-section 3 of section 100D meansthat the provisions of section 111 (probing the source of an unexplainedinvestment) will not be applicable on the capital investment made for thenew projects in the form of money or land. In this case, the developer orbuilder is required to register the project by 30 June 2021.