Budget 2024-25 Shows An Increase In Federal Excise Duty On Cement By 50%

June 15, 2024Zayn0

The current administration declared a large rise in the Federal Excise Duty (FED) on cement, a decision that is expected to have an impact on the construction industry. The current FED of Rs. 2 per kilogram would increase by 50% to Rs. 3 per kilogram, as stated in the budget address.

New FED on Residential and Commercial Construction

This update was released by Finance Minister Muhammad Aurangzeb, who emphasized that it is part of a larger initiative to restructure FED nationwide.  A 5% FED has also been imposed by the government on newly constructed residential and commercial sites. Based on their face values, this obligation applies to all allotments, including those that are referred to as files and do not have possession.

Changes in Real Estate Capital Gains Tax

The real estate capital gains tax is also being modified under the budget. The minimum rate is fixed at 15%, and it may go up to 45% based on the length of time a property is kept before being sold.

Withholding Tax (WHT) Revisions

Furthermore, modifications have been made to the Withholding Tax (WHT) on real estate transactions. The WHT for filers has increased to 3% from 2%. Late filers will be assessed 4% WHT. Withholding taxes (WHT) on non-filers will range from a minimum of 7.5% to a maximum of 20% on properties worth more than Rs. 100 million.

Justification and Implications 

The government is taking these steps as part of its plan to increase income and streamline the tax code for the real estate and construction sectors. The overall cost of construction projects is anticipated to be significantly impacted by the new taxes on residential and commercial developments as well as the increased FED on cement. This could affect how accessible and affordable housing and business spaces are for the general population. Conclusion

Conclusion

To sum up, the 2024–25 budget has brought about several significant adjustments, such as a 50% rise in the Federal Excise Duty (FED) on cement, a 5% FED on newly constructed homes and businesses, and adjustments to the real estate capital gains tax and withholding tax. The purpose of these policies is to increase income and reorganize the tax code to benefit the real estate and construction industries.

Zayn

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