Islamabad, January 11, 2025 – The Federal Board of Revenue (FBR) has agreed to consider to grant significant tax relief on property transactions, aiming to stimulate the construction and real estate sectors.
Reportedly, FBR Chairman Rashid Mahmood has agreed in principle to reduce withholding taxes on property sales and purchases, reconsider the 5% Federal Excise Duty (FED) on property transactions, and introduce incentives for first-time homebuyers and affordable housing schemes.
The decision was discussed during a meeting of the Working Group on Taxation under the Task Force for Housing Sector Development, chaired by the FBR Chairman. Stakeholders highlighted concerns over high transaction taxes, which currently amount to as much as 13% on a single transaction—4% each for sales/purchases, 5% FED, and 4% provincial stamp duty. This burden has significantly curtailed transaction volumes in the real estate market.
In response, the FBR Chairman proposed a comprehensive review of tax rates under sections 236C and 236K of the Income Tax Ordinance, 2001, contingent on provincial governments refraining from increasing their own taxes. He also formed a committee led by the Member Policy (FBR) to rationalize transaction taxes, address definitional issues under Section 7E, and recommend fiscal measures for low-cost housing.
The committee comprises experts from the real estate sector, housing authorities, and government representatives, including Ahsan Malik (Real Estate Analyst), Sardar Tahir Mehmood (President, Federation of Realtors, Pakistan), and Maj. Gen. Aamir Aslam (Chairman, NAPHDA). This committee will also align property valuation rates with market values, conduct annual reviews, and strengthen valuation mechanisms in collaboration with FBR’s Inland Revenue Operations Wing.
While showing flexibility in addressing tax concerns for developed and idle properties, the FBR Chairman maintained a firm stance against granting concessions to non-filers. However, he acknowledged the need to streamline the verification process for non-residents through online systems in collaboration with NADRA, reducing dependency on field offices.
Real Estate Analyst Ahsan Malik expressed optimism, stating that the relief package is likely to be finalized and announced by February 2025. He emphasized that the package would promote first-time homeownership and provide incentives for affordable housing.
The proposals will undergo further deliberation in the upcoming Executive Committee meeting of the National Tax Council, which will also coordinate with provinces to ensure uniformity in property-related taxation.
This initiative marks a crucial step toward revitalizing Pakistan’s real estate sector and making housing more accessible to the masses.