Government Likely to Abolish FED on Property Transfers Due to Low Revenue
The federal government is expected to eliminate the Federal Excise Duty (FED) on plot and commercial property transfers under the Finance Act 2024, following low revenue collection in the first half of the fiscal year.
The Federal Board of Revenue (FBR) is likely to propose abolishing the FED on the allotment and transfer of both residential and commercial properties, a measure that could be implemented in the 2025-26 budget.
Read More: Punjab Unveils Major Property Tax Exemption Initiative
Current FED Structure on Property Transactions
At present, developers and builders are required to collect FED at rates between 3% and 7%, depending on the buyer’s tax status. However, ineffective monitoring has limited the impact of this tax policy.
- Active taxpayers: 3% FED is collected on the total transaction value.
- Non-filers (tax returns submitted but not on the active list): 5% FED applies.
- Non-taxpayers (not appearing on the active taxpayers’ list): 7% FED is charged.
Proposed Tax Reforms in the Real Estate Sector
The government is also considering reducing transaction taxes on buying and selling immovable properties. The Taskforce on Housing Sector Development has proposed:
- Eliminating Capital Value Tax (CVT) in Islamabad.
- Standardizing stamp duties across provinces.
- Granting tax exemptions on real estate investments up to Rs. 50 million.
These reforms aim to boost real estate activity and encourage investments, aligning with broader economic revival efforts.
