The construction sector has been facing a lot of difficulties after the new Sales Tax Act was introduced in the 2019-20 budget, which requires the dealers to obtain the CNIC of the retailers on invoicing them.
The new policies also say that if a retailer’s sales are more than PKR 10 million/year, he automatically becomes a government tax-withholding agent and is supposed to tax dealers at 4.5%.
The steel bars association said that depreciation in the value of rupee along with the new policies of the government has slowed down the construction industry overall. They said that they were increasing the prices of steel bars by PKR 7,000 from 105,000-110,000/ton to 116,000-117,000/ton.
He said that the condition of the construction industry is already in decline due to fluctuating prices of the dollar and with no new government projects being started, the condition is getting worse.
He further added that over 50 construction projects in Karachi are also being brought to a halt because of the drastic increase in the project’s costs. He said that just two and a half months ago the prices of steel bars were PKR 95,000-96,000/ ton and now they have increased by almost 20,000/ton.
Steel and cement account up to 35%-40% and 10%-12%of the total project cost respectively, if these costs increase the project costs will automatically increase.
Association of Builders and Developers Chairman Muhammad Hassan Bakhshi said that middlemen, who are often illiterate and usually operate without proper identification are facing problems after the government-mandated CNIC based invoices.