Islamabad, April 28, 2025 – The Federal Board of Revenue (FBR) has reported a significant 25% increase in tax collection from property transactions during the first nine months (July – March) of the current fiscal year 2024-25.
The FBR collected a total of Rs169 billion in Withholding Tax (WHT) on both the sale and purchase of immovable property, compared to Rs136 billion in the same period last year, marking a notable rise.
This increase comes despite a reduction in the number of property transactions, which saw a decline of nearly 15% in the current fiscal year. Initially, the FBR had projected a 50% rise in property-related taxes due to the sharp hike in tax rates implemented in the FY2024-25 budget. However, the actual increase stands at 24%, with property taxes growing substantially but falling short of the original target.
The FBR’s tax policies for property transactions have been significantly restructured in recent years. In the tax year 2021, the tax rate for the sale of immovable property under Section 236C was set at 1% for filers and 2% for non-filers. By 2023, these rates were raised to 2% for filers and 4% for non-filers. In the current tax year 2024, the rates have further increased to 3% for filers and 6% for non-filers. Similarly, the advance tax on property purchases has seen an upward revision, from 1% for filers and 2% for non-filers in 2021, to 3% for filers and 10.5% for non-filers in 2024.
Despite the considerable increase in tax rates, the property sector has contributed significantly to national revenue. In the first nine months of FY2024-25, the total amount collected from property transactions was Rs169 billion, up by 24.3% from the Rs136 billion collected in the same period last year. This surge highlights the continued importance of the property sector in the country’s overall tax framework.
However, the government is considering changes to the Federal Excise Duty (FED) on property transactions. The FED, which currently stands at 3% for filers, 5% for late filers, and 7% for non-filers, has raised less than Rs2 billion in the first nine months of the year. A proposal to abolish this tax is under review, although it has not yet received approval from the federal cabinet.
In comparison, the salaried class has paid approximately Rs370 billion in taxes this fiscal year, surpassing the property sector in total contributions. This reflects a growing trend where the salaried class is becoming the largest contributor to national revenue, outpacing other sectors like property and exporters.
The government’s efforts to adjust tax rates on property transactions, alongside the ongoing discussion about the FED, indicate a continued focus on the real estate sector as a key revenue source. The FBR remains committed to enhancing tax compliance and improving revenue collection from property deals in the future.