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Brief on Tax Laws Amendment Ordinance 2020

Brief on Tax Laws Amendment Ordinance 2020

The Tax Laws (Amendment) Ordinance, 2020 [the Amendment Ordinance] follows through on the Special Incentive Package announced by the Prime Minister in early April for revival of construction sector in backdrop of deterioration of macroeconomic indicators.

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Saqib Masood

Partner and Head of Location - Karachi

KPMG in Pakistan

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Brief on Tax Laws Amendment Ordinance 2020

To align with this announcement, the Amendment Ordinance grants status of ‘industry’ to construction sector through suitable amendment in the Income Tax Ordinance, 2001 [the 2001 Ordinance] and offers several time bound tax reliefs to builders and developers who complete their projects by September 2022. Many of these concessions are optional. Those who decide not to opt for the tax rates offered by the newly promulgated Eleventh Schedule may continue to be taxed under normal tax regime. The Amendment Ordinance also grants immunity from probe regarding source of investment, subject to fulfillment of certain conditions, though it is noted that immunity is restricted to the provisions of the 2001 Ordinance and does not cover the Banami Transactions (Prohibition) Act, 2017. The Amendment Ordinance is also silent on any exemptions from sales tax or excise duty on construction material, though this was also part of the package announced by the Prime Minister. There is also no relief from capital gains tax on commercial property or open plots despite announcement to the contrary.

This publication contains an overview of the salient features of the amendments. We recommend that while considering the application of the amendments to any case, reference be made to the specific wordings of the relevant statutes.

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The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. The KPMG name and logo are registered trademarks or trademarks of KPMG International.

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