Islamabad, June 7, 2025 – The Federal Excise Duty (FED) imposed on the transaction of immovable properties is likely to be abolished in the upcoming federal budget for 2025-26, expected to be presented on June 10.
This move is being seriously considered by the government following strong lobbying from key stakeholders in the real estate and construction sectors.
According to sources within the Federal Board of Revenue (FBR), the government has been urged by industry leaders to eliminate the FED on transactions involving properties, especially commercial and residential properties. The Association of Builders and Developers of Pakistan (ABAD) has been at the forefront of this campaign, submitting formal budget proposals and stressing the need to remove this tax burden.
ABAD argued that the current FED, which ranges from 3% to 7% on the value of allotment and transfer of properties, significantly raises the overall transaction cost. This, in turn, has made real estate properties less affordable for end-users and investors alike, discouraging both local and foreign investment in the housing and commercial sectors.
“The FED has become an unnecessary financial burden on builders and property buyers, especially when the country is already dealing with economic uncertainty and rising inflation,” ABAD stated. The organization emphasized that the FED not only increases the cost of doing business but also overlaps with other taxes—particularly the advance income tax under Section 236C of the Income Tax Ordinance, 2001—which further discourages activity in the real estate market.
ABAD also pointed to recent cabinet discussions in April 2025 that considered reducing FED in various sectors, interpreting it as a sign of the government’s openness to policy reforms. They believe that abolishing the FED on properties would be a logical extension of these discussions and would align with the government’s goals of boosting housing development and economic expansion.
Removing FED from property transactions could stimulate demand, improve affordability, and enhance investment in construction and related industries. It would also simplify the tax structure and remove redundant levies that have stifled growth in the sector.
If implemented in Budget 2025-26, the abolition of FED on properties could mark a significant turning point for Pakistan’s real estate market.