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The Pakistan federal cabinet has approved an ordinance regarding an incentive package for the construction industry to boost its economy to mitigate the effect of COVID-19 pandemic. 

The Government has allowed construction activities to resume post-April 14, along with providing concessions and tax relaxations. An amendment has been made to the Income Tax Ordinance (2001) providing tax relaxation to the builders and developers in the country. 


Financial aid through a package of around PKR 1 trillion ($6.14bn) is likely to encourage builders and investors and uplift the construction and real estate sectors through new investments.

Pakistan’s Association of Builder and Developers (ABAD) has supported the move as a recovery in the construction industry is likely to give an impetus to around 70 other allied industries.

Pakistan Institute of Development Economics (PIDE) too had stated that the construction industry needed more tax liberalization to compete with other competitors in the region and create more employment opportunities in the country’s economy.


Post Ramadan month, the industry expects construction activities to pick up and boost steel and other input material demand. Amid the COVID-19 outbreak, there are only a few steel plants operational and finished steel prices remain flat. A rise in construction activity will give finished steel prices a lift in the coming days. Ferrous scrap importers are also preparing for a boost in the demand after Ramadan.

The industry is now awaiting an announcement of universal policy for approval of building plans throughout the country so that builders and developers could start construction as early as possible.

Pakistan Iron and steel Merchant Association stated with COVID- 19 weighing down the economy, the construction industry would play the role of catalyst for the country’s growth.


Key features of the package 

• Non requirement of declaration of source of income for those investing in a newly-constructed building until June 30, 2022

• Withholding tax on all materials and services for the construction sector would be abolished except for the steel and cement sectors.

• PKR30bn (US$179.6m) subsidy would be disbursed for the Naya Pakistan Housing Scheme.

• A reduction in tax rates by 90pc will be offered to a developer constructing under the Naya Pakistan Housing Scheme.


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