The recent presentation of the 2023-24 budget in Pakistan has brought forth exciting developments for both the local construction and real estate sector, as well as overseas Pakistani investors. The budget outlines several key provisions aimed at providing relief, support, and incentives to stimulate growth in these sectors.
This blog post will delve into the three main points highlighted in the budget, namely, relief for the construction sector, favors for builders, and positive news for overseas investors.
1. Relief for the Construction Sector:
The government has taken significant steps to offer relief to individuals involved in the construction of their own houses. From 2023 to 2026, those completing construction within this period will receive tax liability benefits. For instance, if an individual has a tax liability of 1 Lac for the entire year and completes construction on their personal property within the specified timeframe, they can avail themselves of a 10% relief or up to 10 lakh, whichever is lesser. However, it is important to note that this facility is only available to filers and is contingent upon the approval of the location map by the Lahore Development Authority (LDA). Moreover, the completion of the house will be linked to the final tax return.
2. Favor for Builders:
The budget also acknowledges the importance of the real estate industry and the need to facilitate builders. The budget imposes a requirement of either 50 Lac rupees or 10% of the tax liability, whichever is lesser, to be paid. The government recognizes the significance of high-rise buildings and aims to make maximum construction tax-free. As the demand for housing increases and agricultural land diminishes in Lahore, high-rise buildings and apartments have become an attractive options. The previous budget already offered tax exemptions for apartments and high-rise buildings, with shorter minimum tenures compared to plots and commercials.
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3. Good News for Overseas Investors:
The budget brings welcome news for overseas Pakistanis who have been eager to invest in their home country. Previously, a 2% advanced tax deterred many overseas investors from making substantial investments. However, in the new budget, it is explicitly stated that overseas Pakistanis will no longer have to pay the 2% advance tax when purchasing or selling property in Pakistan. This move aims to encourage increased investments from the overseas Pakistani community. Furthermore, the budget raises the limit on the amount of money overseas Pakistanis can send to Pakistan without scrutiny. Previously capped at $50,000, the limit has now been increased to $100,000, providing greater flexibility for overseas Pakistanis to invest in their homeland.
Conclusion:
The 2023-24 budget in Pakistan brings promising news for the local construction and real estate sector, as well as overseas Pakistani investors. The government’s focus on providing relief to the construction sector, facilitating builders, and incentivizing overseas investments demonstrates a commitment to fostering growth and development in these areas. The provisions outlined in the budget are expected to create a favorable environment for investment and stimulate economic activity in the construction and real estate sector. As this budget summary is submitted for assembly approval, there is optimism that these measures will be implemented, paving the way for a thriving construction and real estate industry and a flourishing partnership with overseas Pakistani investors.
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