Capital’s builders urge govt to announce relief package for construction industry in upcoming budget


The Islamabad Developers Association (IDA) at conference held to discuss proposals for the upcoming budget urged the government to announce relief package for construction industry in upcoming budget.

In addition, they also called for working on a policy framework with CDA with a primary focus on issues related to bylaws.

Sardar Yasir Ilyas Khan President of IDA stated that this is a community led organization comprising of developers and stakeholders involved in the development of Islamabad.

The association is dedicated to promoting sustainable and efficient development practices that contribute to the growth and prosperity of the Federal Capital. It was highlighted that 236K related to withholding tax on sale and purchase of property has had a detrimental impact on property transactions due to the additional cost levied on non-filers.

For sellers it has doubled to 4% and for non-filer purchasers it has gone up to 7%. Capital gain tax period should also be reduced to 4 years from 6. Policy related to section 7E which applies taxes on deemed income on additional property has further led to a reduction in the purchase of properties due to the additional tax burden. This has deterred both investors and end users from acquiring additional properties and overseas remittances would also decline further since most of those funds were also being invested in property. Furthermore, CVT on foreign assets would discourage people from declaring their assets or becoming tax residents in Pakistan. Super tax on large scale manufacturing has increased the cost of local materials in addition to the hefty custom duties and sales taxes plus GST levied by the government. Due to the rupee devaluation against the dollar the cost of materials has already gone up significantly which has drastically affected the construction sector. Thus making properties more expensive and unaffordable for the average buyer since disposable income has not increased. The industrial sector is also challenging the 8B policy from FBR related to adjustment of input tax which must be adjusted by 100% instead of 90% out which 10% is being carried forward every year thus affecting the cash flow of businesses.
The developers also emphasized on the Issues related to CDA with regards building approvals, completion certificates, processing of documentation which can be organized by digitization. Long pending issue of transfer of apartments and commercial units in CDA due to pending building completion certificates has also become very critical as CDA continues to challenge and harass builders based on unjust non-conforming notices. Shortcomings in building regulation 2020 of CDA (Highrise Buildings) which also relates to ceiling heights, by laws related to covered area plans, approval delays, fire audit, FAR, roof right issues, BCS etc in addition to cumbersome and time-consuming process of getting NOCs for real estate developers. Inadequacies in building regulation 2020 of CDA (Hotel Property Development) are also apparent. Till date CDA and MCI do not have a fire snorkel that can reach above 200ft which jeopardizes the safety of the residents living and working in the capital. The developers are fulfilling their part of the agreements by making the necessary payments to CDA however there are several infrastructure issues in terms of utility connections and appropriate infrastructure to support such projects. Even though CDA is allowing older buildings to build additional storeys, the cost of buying additional area from CDA is so high that the project does not seem viable, also CDA must allow all buildings that are structurally sound to upgrade and enhance their buildup area as long as they are following the permissible by laws.