ISLAMABAD: The Federal Board of Revenue (FBR) has said that fixed tax regime for builders and developers would remain applicable for tax year 2017 subject to certain conditions.
In Income Tax Circular No. 04 of 2017, the FBR said that fixed tax regime for builders and developers under Section 7C and 7D of Income Tax Ordinance, 2001 has been abolished through Finance Act, 2017.
The FBR said that the Finance Act, 2013 introduced minimum tax upon the income of builders from the business of construction and sale of residential or commercial buildings and the income of developers from the business of sale of residential or commercial plots.
Thereafter, the minimum tax regime was abolished and a fixed tax regime for builders as well as developers was introduced through the Finance Act, 2016 whereby the tax liability was based on square footage of area developed/constructed under section 7C and 7D of the Ordinance.
The fixed tax regime available to builders and developers has now been abolished/ withdrawn through the Finance Act, 2017. Tax shall now be charged on the income of builders and developers under the normal tax regime for the Tax Year 2018 onwards.
However, for projects initiated and approved during Tax Year 2017 the provisions of section 7C and 7D shall remain applicable, subject t fulfilment of the following conditions:
(a) Payment has been made by the developer/builder during the Tax Year 2017 in accordance with Rule 13S of the Income Tax Rules, 2002.
(b) The Chief Commissioner has issued online schedule of advance tax instalments to be paid under Rule 13U of the Income Tax Ordinance, 2002 in the case of builders and under Rule 13ZB of the Income Tax Rules, 2002 in the case of land developers.