Under this pardon, the Federal Board of Revenue (FBR) has been delimited from asking questions related to the source of investment made into the real estate business. Both previous and current federal governments have launched tax immunity schemes, the extent of this scheme is limited to the investment made in the real estate business only. The protector of this particular amnesty scheme argues that this would act as a catalyst to increase economic activity in the country thereby improving work opportunities as the number of sub-sectors and small and medium-size businesses are connected with the construction industry. The newly introduced real estate business provides immunity from the provisions of section 111 of the Ordinance, and no questions will be asked concerning the origin of funds from investors making a capital investment in new building projects in the form of money or land, either as an individual, as an association of persons or a company, subject to requirements as described below.
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June 20, 2020KEY POINTS OF AMNESTY SCHEME FOR REAL ESTATE SECTOR
FOR INDIVIDUALS
Commercial: In real estate business investor shall start a new bank account and put such amount in it on or before the 31st day of December 2020
Land: In real estate business investor shall have the claim title of the land at the time of commencement under the Tax Laws (Amendment) Ordinance, 2020
CORPORATE SHAREHOLDER / PARTNER
Commercial: Such amount shall be funded through a crossed banking apparatus deposited in the bank account of such association of persons or company, as the case may be, on or before the 31st day of December 2020
Land: Such land shall be allowed to such association of persons or company, as the case may be, on or before the 31st day of December 2020. Provided that the person shall have the title of the land at the time of commencement of the Tax Laws (Amendment) Ordinance, 2020
ADDITIONAL CONDITIONS TO BE MET
• Prescribed IRIS form shall be offered by the person investing in the real estate business.
• The purchases made shall be fully used in a project.
• Grey construction of inventors and landscaping in case of developers have been completed on or before September 30, 2022, and duly certified by NESPAK or individual map approving officials.
• Further, for the land developer, the following further conditions should be met;
50 percent of plots have been booked for sale and 40 percent of sale proceeds thereof have been taken by September 30, 2022, as duly certified by a specified chartered accountancy firm.
50 percent of the project roads have been laid up to the sub-grade level as duly approved by NESPAK. • The value or cost of the land or building shall be higher of
a) 130 percent of FBR estimated fair market value; or
b) At the option of a person buying, lower of the value determined by at least two independent SBP certified values.
RESTRICTION OF OWNERSHIP CHANGES
Under the new amnesty the real estate business has no change in ownership shall be allowed for incomplete projects except where 50 percent cumulative cost on the project has been incurred as certified by prescribed Chartered Accountants firm, except legal transmission to heirs. Insertion of partners or shareholders after December 31, 2020, is permissible; however, such investors shall not be eligible to an avail tax amnesty.
AMNESTY TO THE PURCHASER
Provisions of section 111 shall also not apply to:
The first customer of a building or a unit in the building in respect of the property price both in case of a new design or existing unfinished project where payment is routed through crossed banking instrument between the date of enrollment of project with the FBR and September 30, 2022. The purchaser of the plot for building construction where the purchase, the payment thereof, and commencement of construction has been made on or before December 31, 2020, subject to construction completion by September 30, 2022, and directed to the registration of such buyer with FBR on IRIS portal
