Government Plans Major Tax Cuts to Revitalise Property Market
In a bid to stimulate Pakistan’s property market, the government is reportedly considering significant reductions in property transaction taxes, with a focus on high-value properties.
Proposed Tax Reductions
According to sources, the proposed measures include:
- Tax cuts on properties worth more than Rs100 million.
- Reduction in advance tax for filers, slashing the rate from the current 4% to 0.5%.
The Federal Board of Revenue (FBR) has already started drafting proposals to implement these changes. Prime Minister’s Office has directed authorities to accelerate the process, emphasizing the need to foster a favourable environment for property transactions.
Read More: Prime Minister Shehbaz Urges Reduction in Income Tax for Salaried Workers
IMF Consultation Underway
To ensure alignment with fiscal objectives, the government plans to consult the International Monetary Fund (IMF) before finalizing these measures.
The proposed reductions are expected to encourage investment, stimulate economic activity, and provide relief to both buyers and sellers in the real estate sector.
Recent Developments in Property Taxation
The government has already introduced some relief measures for property owners:
- The Excise and Taxation Department recently announced an exemption of property tax on houses and residential plots valued up to Rs5 million.
- Future property taxes will now be determined based on the district collector (DC) rate, according to a notification from the Directorate General of Excise and Taxation.
- Citizens have been assured that they will not face any additional property tax this year, confirmed Umar Sher Chattha, the director general of excise and taxation.
Curbing Black Money in Real Estate
The Senate Standing Committee on Finance Sub-Committee, chaired by Senator Mohsin Aziz, discussed steps to combat black money in the real estate sector. During the meeting, FBR Chairman Rashid Mahmood Langrial outlined key decisions:
- Ban on property purchases worth over Rs10 million with undeclared income.
- Individuals must now declare their income in tax returns to engage in high-value property transactions.
Langrial highlighted that 97% of property transactions in Pakistan involve values below Rs10 million, with the 2.5% high-value segment being the primary target of these new measures.
“Most undeclared money and wealth is funnelled into the real estate sector,” Langrial stated, reinforcing the government’s commitment to curbing illicit financial activities.
Impact on the Real Estate Sector
These combined efforts—tax relief and measures to address black money—aim to revitalise Pakistan’s property market. By encouraging legal investments and easing tax burdens, the government hopes to boost economic activity while ensuring greater transparency in high-value real estate transactions.
