Relief for Construction Sector: FBR to Reassess Real Estate Taxes

Pakistan’s Real Estate Sector May See Lower Transaction Taxes

In a major move for Pakistan’s real estate market, FBR Chairman Rashid Mahmood has agreed to review high transaction taxes on property sales. This decision aims to revive property transactions, support affordable housing, and boost construction activity.

What’s Changing?

High taxes under sections 236C and 236K of the Income Tax Ordinance, combined with a 5% Federal Excise Duty (FED) and 4% provincial stamp duty, currently add up to a 13% tax burden on property deals. The FBR is considering reducing these taxes and revisiting the 5% FED, provided provincial governments don’t increase their real estate taxes.

Focus on Affordable Housing

The FBR also works on incentives for first-time homebuyers and affordable housing projects. A special committee, including industry leaders, is drafting recommendations to streamline taxes and align property valuations with market rates for transparency.

Simplified Processes for Overseas Pakistanis

To make real estate investment easier for overseas Pakistanis, the FBR plans to introduce an online verification system with NADRA, reducing dependency on field offices.

What’s Next?

With reforms expected by February 2025, the proposed changes aim to lower taxes, promote affordable housing, and attract investment in Pakistan’s property market.