New Ordinance Increases Estimated Project Life of Construction Projects

The Income Tax (Amendment) Ordinance, 2021 has extended the maximum estimated project life from 2.5 years to 3.5 years for new construction projects and from 3 years to 4 years maximum for existing projects of developers and builders.

According to the salient features of the Ordinance shared by Asif S Kasbati, Karachi based leading tax expert and ICAP Fiscal Laws Committee Member, the FBR has amended the Special Procedures relating to builders and developers (Section 100D). The Tax Year 2020 income, profits, and gains of a builder or developer of an incomplete existing project, the Amnesty will not be applicable.

For a new project completion, the deadline has been extended from September 30, 2022, to September 30, 2023. For an incomplete existing project, the completion date has been extended from September 30, 2022, to September 30, 2023.


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The builder or developer being an individual, AOP & company, for investment in a new project, the deadline for depositing into a new bank account, in order to avail immunity, has been extended from December 31, 2020, to June 30, 2020. In the case of AOP & Company, the deadline for investment/transfer in the name of AOP & Company has been extended from December 31, 2020, to June 30, 2021.

The deadline for submitting prescribed forms by all the investors on IRIS has been introduced as of June 30, 2021.

For builder and developer, the deadline has been extended from September 30, 2022, to September 30, 2023, for certification of grey structure for builder and landscape in the case of a developer. For Developer, the deadline for certification from a firm that at least 50% of the plots have been booked for sale and at least 40% of the sale proceeds have been received, has been extended from September 30, 2022, to Sep 30, 2023.

The immunity for the first purchaser of a building or unit of a building from a new project or existing project subject to full or remaining payment has been extended from 30.9.2020 to 31.3.2023.

For existing projects, a declaration is provided in the registration form under Eleventh Schedule to the effect of percentage of the project completed up to the last day of the accounting period was earlier pertaining to the tax year 2019 only and now may be applied to the tax year 2020 at the option of the taxpayer.


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The Salient features of the amendments in the Eleventh Schedule are:

  • For new projects, the maximum estimated project life has been extended from 2.5 years to 3.5 years.
  • For existing projects, the estimated project life has been extended from 3 years to 4 years maximum and the tax payable shall be reduced by the percentage of completion up to the last day of the accounting period pertaining to the tax year 2019 earlier and now for the tax year 2020 as well as declared in the registration form
  • The deadline for registration has been extended from 31.12.2020 to 31.12.2021
  • A builder or developer can now electronically register a project on IRIS through the FBR website by 31.12.2021 instead of 31.12.2020
  •  For immunity purposes, the additional partners or shareholders in a builder or developer if invested by 30.6.2021 (rather than the earlier deadline of 31.12.2020)

The commencement of the project meaning in case of a development project, when the development plan is approved by the concerned authority.

However, where the building or developer has taken all actions and done all things which are required and necessary to procure any approvals but any such approval is delayed beyond a period of 30 days from the date of the relevant application, the Board may provisionally accept commencement of such project on a case to case basis, Asif S Kasbati added.



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