New Fixed Tax Regime from Tax Year 2020 and Onwards for Eligible Builders and Developers.

Chapter VI (Special Industries), Part II

. . .

 

[100D. Special provisions relating to builders and developers. – (1) For tax year 2020 and onwards, the tax payable by a builder or a developer, as defined in sub-section (9), who opt to pay tax under this section shall be computed and paid in accordance with the rules in the Eleventh Schedule on a project by project basis on the income, profits and gains derived from the sale of buildings or sale of plots, as the case may be, from–  

 

(a) a new project to be completed by the 30th day of September, 2022; or

 

(b) an incomplete existing project to be completed by the 30th  day of September, 2022:

 

. . . .

 

Eleventh Schedule [See section 100D]

 

Rules for computation of profits and gains of builders and developers and tax payable thereon

1. Eligibility.–These rules shall apply to projects undertaken by builders and developers under section 100D. 

2. Scope and payment of tax.—(1) Income computed and tax payable thereon shall be on Project-by-Project basis which shall be computed and paid at the rates provided in rule 10.

 

(2) (a) The above-referred rates shall be applicable for  computing tax liability for the project on annual basis. The annual tax liability shall be worked out as under:

Tax liability as per the rates in rule 10

Estimated project life in years

 

(b) The estimated project life for tax purposes shall not exceed two and a half years:

Provided that in case of existing incomplete projects, the estimated project life shall be treated as three years from tax year 2020 through tax year 2022, and the tax payable

 

shall be reduced by the percentage of completion up to the last day of the accounting period pertaining to tax year 2019 as declared in registration form:

 

Provided further that tax liability of tax year 2020 shall be paid along with return.

 

(b) Year shall include fraction of a year; and (c) The tax liability so calculated and paid shall be final tax.

. . .

10. Rate and computation of tax liability.-(1) The rate of tax under section 100D shall be computed in accordance with the Table below, namely

 

 

Rate in Respect of

1

2

3

4

Area in 

Karachi, Lahore and Islamabad

Hyderabad, Sukkur, Multan, Faisalabad, Rawalpindi, Gujranwala, Sahiwal, Peshawar, Mardan, Abbotabbad, Quetta

Urban Areas not specified in columns (2) and (3)

Tax on builders for commercial buildings

Sq ft

 

 

 

Any Size

Rs. 250 per square ft

Rs. 230 per square ft

Rs. 210 per square ft

For Residential Buildings

Sq ft

 

 

 

Upto 3000ft

Rs.80 per square ft

Rs.65 per square ft

Rs.50 per square ft

3000 and above

Rs.125 per square ft

Rs.110 per square ft

Rs.100 per square ft

Tax on Developers on the entire project for any size in square yards

Sq Yds

 

 

 

Any Size

Rs.150 per square yd

Rs.130 per square yd

Rs.100 per square yd

For Development of Industrial Area

Sq Yds

 

 

 

Any Size

Rs.20 per square yd

Rs.20 per square yd

Rs.10 per square yd

           

 

(3) In case of development of plots and constructing buildings on the same plots as one project, both rates shall apply.

Provided that in the case of low cost housing' and all projects developed by NAPHDA, the higher rates shall apply.

Source

Income Tax Ordinance 2001, Section 100D and Rule 10 of the Eleventh Schedule

(2) In case of mixed use buildings having both commercial and residential areas, respective rates mentioned above shall apply.

Details
An optional ‘Fixed tax regime’ from tax year 2020 and onwards for eligible builders and developers has been introduced on the income, derived from the sale of buildings or sale of plots, from a new or an incomplete existing project. Prior to this, tax was levied on a net income basis. Rate and computation of liability is determined under rule 10 of the eleventh schedule