Tax bar urges reduction in property withholding taxes, says current rates are hurting real estate activity and investment
The Karachi Tax Bar Association (KTBA) has called for an end to higher withholding tax rates on immovable property transactions, saying the current structure is discouraging activity in the real estate sector.
In its budget proposals for 2026–27, the KTBA said withholding tax rates under Sections 236C and 236K of the Income Tax Ordinance, 2001 have become excessively high and are acting as a major barrier to property transactions across Pakistan.
The association noted that these taxes were originally introduced to collect data on buyers and sellers in the real estate market, but argued that the Federal Board of Revenue (FBR) has already accumulated sufficient information over the years.
“Continuing to use these taxes primarily as a revenue generation tool places undue pressure on the real estate sector, which has already faced significant challenges in recent years,” the KTBA said in its recommendations.
The association proposed reducing withholding tax rates to ease pressure on investors, builders and property buyers, arguing that lower transaction costs could help restore confidence and stimulate economic activity in the sector.
KTBA further suggested that instead of relying on higher taxes on non-filers, authorities should focus on restricting their ability to conduct transactions while clearly defining exemptions and exclusions.
According to the association, such targeted measures would improve tax compliance without further weakening an already strained property market.
Industry observers say the real estate sector remains sensitive to taxation policy, with transaction costs playing a key role in determining market activity and investment flows.
