Karachi, January 22, 2025 – The Korangi Association of Trade and Industry (KATI) has strongly advocated for a reduction in withholding tax on property transactions to revitalize Pakistan’s struggling construction and housing sector.
Speaking on Wednesday, KATI President Junaid Naqi outlined a series of policy recommendations aimed at boosting the sector, which he described as the backbone of Pakistan’s economy. According to Naqi, implementing these measures promptly could not only prevent the flight of capital but also unlock an investment potential of up to $100 billion.
Naqi highlighted that the housing and construction sector is intrinsically linked to 72 allied industries, generating extensive employment opportunities and driving economic activity. To fully harness its potential, he proposed reducing the withholding tax on property transactions to 1%, a move that would encourage market activity and property ownership. He also recommended declaring the first property purchase tax-free to promote homeownership among citizens.
In addition, Naqi called for the abolition of the 3% Federal Excise Duty (FED), which he described as legally unenforceable in provinces and an unnecessary burden on the industry. He argued that its removal would significantly alleviate financial pressures on the construction sector and stimulate growth.
The KATI President also criticized the “deemed income” concept, labeling it a major impediment to the housing sector’s development. He urged the government to eliminate this provision, which he believes deters investment in real estate and housing projects.
To address the challenge of affordability, Naqi proposed introducing a 10-year fixed-rate mortgage product, tied to the 10-year PIB bond yield. This initiative, he explained, would make homeownership more accessible to middle and lower-income groups. Furthermore, he urged the government to incentivize banks to prioritize lending to the construction sector, designating it as a priority industry to foster broader economic growth.
Naqi emphasized that these measures are crucial for unlocking the full potential of Pakistan’s housing sector and paving the way for economic recovery. He reiterated that the housing industry holds the key to catalyzing economic development, reducing unemployment, and stimulating allied industries, which collectively contribute significantly to the country’s GDP.
KATI’s proposals aim to ensure that Pakistan’s housing sector thrives as a pillar of the economy, driving investment and growth for years to come.
