KARACHI: The Finance Bill 2016 seeks to introduce a unique non-income based Fixed Tax Regime for ‘Builders’ and ‘Developers’.
Under this regime, tax liability for the builders and developers shall be determined on the basis of area, instead of the value of property or actual transaction value.
Builders and developers eligible for these provisions shall be the persons engaged in construction and sale of residential, commercial or other buildings and plots under the projects initiated and approved by the relevant land and building authorities (as may be prescribed) after July 1, 2016.
Notwithstanding being a Fixed Tax Regime, this proposal is likely to incentivize recording of the actual value of the developed property, as the declaration of the real value will not result in any income based tax incidence for the seller which is fixed on area basis.
This regime will be applicable for business or projects, initiated and approved after July 1, 2016.
As a consequence of the introduction of the above, the minimum tax regime under sections 113A and 113B for builders and land developers is proposed to be withdrawn.