KARACHI: Builders welcomed the steps taken in the budget 2015-16 to promote the construction sector, though they were critical that no steps have been taken to bring down cement price.
Salim Kassim Patel, convenor of Association of Builders and Developers’ (ABAD) budget subcommittee, said: “The budget looks positive as a whole. But it’s surprisingly silent on proposing steps to make cement cheaper.”
The minimum tax on builders, leviable for the business of construction and sale of residential and other buildings, is proposed to be exempted till June 30, 2018 which comes as a relief to the housing sector, he said.
In his budget speech on Friday, Finance Minister Ishaq Dar said mark-up on housing loans obtained by individuals from banks and other institutional lenders for construction or purchase of a house is proposed to be allowed as a deduction against income up to 50pc of taxable income, or Rs1 million.
He said reduction of mark-up to six per cent on housing finance is the main requirement to overcome the backlog of seven to eight million houses as the housing mortgage-to-GDP ratio is less than 1pc, probably the lowest in the world.
“Being the feed arm of 70 allied industries, construction needs much support for reviving the economy,” Patel said. He said steps towards abolition of regulatory duty on steel billets are needed to reduce the price of re-rolled steel.
The government has encouraged the organised and corportarised sector to make investment in the housing sector. Certain incentives are announced for Real Estate Investment Trust (REIT) development schemes. Capital gains of any person who sells a property to a REIT development scheme formed for the development of the sector is proposed to be exempt from income tax up to June 30, 2018.
It is also proposed that if a development REIT scheme is set up by June 30, 2018, for the first three years the rate of income tax chargeable on dividend income of such REIT may be reduced by 50pc.
In order to reduce cost of construction, it is proposed that supply of bricks and crushed stone may be exempted from sales tax for three years up to June 30, 2018.
On import of dump trucks, super swinger truck conveyors, mobile canal lining equipment, transit miners, concrete placing trucks, truck mounted cranes and crane lorries in used condition by the construction companies registered with Pakistan Engineering Council and SECP, the Customs Duty is proposed to be reduced from 30pc to 20pc.
GREENS: Fruits and vegetable exporters have also hailed the steps taken in the budget for development of the agriculture sector.
Waheed Ahmed, chairman of All Pakistan Fruit and Vegetable Exporter, Importer and Merchants Association’s research and development department, said increase in limit of loan target for agriculture sector up to Rs600 billion, relief for small growers in taking loans including import of agriculture equipment, decline in non-adjustable sales tax for local supplies to seven from 17pc and relief in customs duty and sales tax on import of agricultural machinery and equipment, among others, would play a positive role in boosting investment in agriculture sector and boost latest technology in the sector.
Published in Dawn, June 6th, 2015