Construction Amnesty Scheme is a dream or drama ?
During the briefing of post-Budget 2021-22, Finance Minister Shaukat Tarin disclosed the government has asked an extension of six months in the Amnesty Scheme from the International Monetary Fund. Shaukat Tarin elaborated the government want to facilitate those intending to invest their untaxed money in the construction projects.
The Scheme was launched under the Construction Package, announced by Prime Minister Imran Khan for the construction industry in July 2020. The Amnesty Scheme had been earlier offered till December 2020, however was later extended for another six months to facilitate those intending to invest their untaxed money in the construction projects and avail the fixed tax regimes for the construction sector.
Builders and developers alongside government want another extension of further six months, but it is widely believed the International Monetary Fund may not allow now another extension in amnesty scheme for non-disclosure of sources of income.
As according to a news report the FBR officials were of the opinion the IMF had already given waiver to the government on several other tax initiatives due to the impact of Covid-19. Now the tax officials believe the IMF might not allow another extension until December 31, 2021 for non-disclosure of sources of income in the post-pandemic era.
There are other criticism and drawbacks in the Scheme, which need to be reviewed before opting for extension.
The Amnesty Scheme allows mainly builders and developers of housing societies and projects to avail economic incentives of direct and indirect taxes has earned ire of many. As businessmen of other industries question if real-estate investors can be given a waiver on ill-gotten money, why target the others and not extend a similar amnesty to them for the sake of the economy and political stability.
In a business forum a businessman rightly observes “The government’s tax amnesty scheme for construction sector would divert business from one sector to another and wealthy people will be the real beneficiaries of the scheme as they invest in real estate to whiten their untaxed money.”
Lip Servicing for Poor
The Construction Package, in the speech of PM, was justified in the name of helping the poor but in practice, it was not meant for benefiting low income groups or low-income housing. In return of amnesty and incentives, the construction industry should provide full social protection and universal entitlements to its workers and labours. But it is completely missing in reality.
Friends in Cahoots
Many believes the Package doesn’t aim to benefit overall construction sector, but only to real estate developers to launch their posh housing schemes and illegal money hoarders to whiten their money under the umbrella of Package.
A leading businessmen correctly points out the reason behind giving the special package to the construction sector was that it was “close to premier’s heart” while “several donors of the ruling party belonged to the sector.”
Official statistics show that 1,083 projects worth Rs 340 billion have been registered with the FBR along with another 292 tentative projects with an indicative investment of Rs 43 billion under the prime minister’s package for the construction industry till May 2021. And, about 3,851 buyers had shown interest in purchasing properties by availing tax incentives for the construction sector till May 6.
According to extension in amnesty, the last date for completion of projects has been extended from 30th September 2022 to 30th September 2023 and the last date for buyers of housing units and plots has been extended from 30th September 2022 to 30th March 2023. Owing to the present pace of development in the country it looks almost impossible to finish up even quarter of the above 1000 plus registered projects in the next 24 months.
Experts doubts, the federal government perhaps aims to push the speculative functioning of the real estate industry, as nothing real or concrete scenario is achievable. Besides, since stepping into office in 2018, on the name of development for poor, either the government has only provided blanket source-of-funds amnesties to the rich in the construction sector or validated environmental and planning irregularities for pre-existing housing projects, through the payment of small fines.