As part of ongoing budget talks for fiscal year 2025-26, the International Monetary Fund (IMF) has called on Pakistan to significantly increase the Capital Gains Tax (CGT) on property transactions potentially raising the rate from 15% to as high as 40%.
According to sources, the aim is to align CGT with corporate income tax levels and improve the country’s tax-to-GDP ratio, which is being targeted at 11% in the upcoming budget. Meanwhile, national expenditures are projected to reach 20.3% of GDP.
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Federal Board of Revenue (FBR) officials argue that current CGT rates fail to adequately capture the profits generated in the real estate sector. However, stakeholders warn that such a steep increase could dampen real estate activity.
To offset this impact, the government is also considering a tax relief proposal for first-time property buyers — a move that could protect genuine end-users while satisfying IMF revenue concerns.
Key decisions from these negotiations are expected to influence the final shape of Pakistan’s 2025-26 federal budget.
