Karachi, April 10, 2025 — The Karachi Chamber of Commerce and Industry (KCCI) has urged the government to simplify taxation policies for Pakistan’s real estate sector, aiming to restore investor confidence and stimulate economic activity ahead of the federal budget for 2025-26.
In its formal budget proposals submitted to the Ministry of Finance, KCCI stressed that the real estate sector plays a pivotal role in Pakistan’s economy, directly supporting over 45 allied industries such as construction, cement, steel, and home furnishings. However, the Chamber pointed out that excessive taxation measures introduced in Budget 2024-25 have significantly dampened sector performance and discouraged fresh investment.
According to KCCI, the current high taxation regime — including elevated withholding tax rates, mutation charges, and Federal Excise Duty — has made property ownership less affordable and discouraged legitimate transactions. This, in turn, has eroded market activity and shaken investor confidence in the real estate sector.
To address these challenges, KCCI has proposed a comprehensive tax relief package aimed at simplifying and rationalizing the fiscal structure. Key recommendations include reducing withholding taxes under Sections 236C and 236K, as well as mutation charges, from the current 3% to 1%. The Chamber also recommends abolishing the 3% Federal Excise Duty on property transactions and eliminating Section 7E, which places an additional tax burden on deemed rental income.
Additionally, KCCI has called for the reintroduction of the Capital Gains Tax (CGT) slab system as it existed up to June 2024, which encouraged long-term investments and market stability in the real estate sector.
The Chamber argues that these reforms would not only ease financial pressures on buyers and sellers but also rejuvenate the real estate industry, which has been stagnant in recent quarters. Simplified taxation and reduced transactional costs are expected to attract both domestic and foreign investment, increase property market activity, and inject much-needed liquidity into the economy.
By promoting growth in the real estate sector, KCCI believes that broader economic development will follow, offering benefits across the national landscape, from job creation to increased tax revenues through improved compliance.