New fixed sales tax regime aims to encourage investment and accelerate real estate development across the province
KARACHI, June 19, 2026: The Sindh government has proposed a substantial reduction in sales tax rates on services provided by property developers and promoters as part of efforts to stimulate construction activity and attract investment in the province.
According to the Sindh Finance Bill, 2026, the provincial government has introduced a new fixed-rate sales tax structure for property development services, replacing the higher percentage-based taxation applicable to most construction-related activities.
Under the proposed regime, sales tax on services rendered by property developers or promoters will be charged at:
• Rs100 per square yard of land, and
• Rs50 per square foot of constructed covered area.
The finance bill states that these rates will apply specifically to services provided or rendered by property developers and promoters. The revised tax structure is expected to come into effect from January 1, 2026, subject to approval by the Sindh Assembly.
Relief for Real Estate and Construction Sector
The move is being viewed as a significant incentive for the real estate and construction industries, which have long sought a more predictable and affordable tax framework. Industry stakeholders believe the fixed-rate regime could lower project costs, improve compliance and encourage new investments in housing and commercial developments.
At present, construction services are generally subject to a 15 per cent sales tax in Sindh. However, a reduced rate of 5 per cent is applicable to construction services related to government civil works where expenditures are paid from the budgets of the Federal Government, provincial governments, local governments or cantonment boards.
The proposed fixed tax rates for property developers represent a substantial departure from the existing taxation system and are expected to provide greater certainty for investors and developers when calculating project costs.
Construction Sector Seen as Economic Driver
The construction industry is considered a key contributor to economic growth due to its extensive linkages with industries such as cement, steel, paints, electrical equipment and transportation. Policymakers hope that lowering the tax burden on developers will support new projects, generate employment opportunities and increase housing supply across Sindh.
Experts say the success of the measure will depend on its implementation and whether the reduced tax rates translate into lower development costs and increased construction activity in the coming years.
As the Sindh Finance Bill, 2026 moves through the legislative process, property developers, investors and other stakeholders will closely monitor the final shape of the proposed tax reforms and their impact on the province’s real estate market.
