Islamabad: The federal government has announced major tax relief for the real estate sector in the new budget, cutting withholding tax and stamp duty on property purchases, and removing the 7% Federal Excise Duty (FED) on transactions.
During his budget speech on Tuesday, Finance Minister Muhammad Aurangzeb said that the construction sector is vital to the national economy and industrial growth. He added that heavy taxes were hurting this important sector, so the government decided to ease the burden.
The withholding tax has now been reduced as follows:
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From 4% to 2.5%
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From 3.5% to 2%
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From 3% to 1.5%, depending on the value of the property
The 7% FED on the transfer of commercial plots, houses, and properties—imposed last year—has been abolished.
Stamp duty on property transactions in Islamabad has also been reduced from 4% to just 1%, to help address the city’s housing shortage.
According to budget documents, tax relief has been divided into three categories based on property value:
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Properties worth up to Rs50 million
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Properties between Rs50 million and Rs100 million
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Properties over Rs100 million
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However, while buyers received relief, sellers will now face higher taxes. The capital gains tax has been increased as follows:
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From 3% to 4.5% for properties up to Rs50 million
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5% for transactions between Rs50 million and Rs100 million
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5.5% for properties worth over Rs100 million
To encourage low-cost housing, the government has introduced tax credit for houses up to 10 marlas and flats up to 2,000 square feet. Mortgage financing will be promoted through a new nationwide system.
The budget also includes a new restriction on non-filers, who will not be allowed to buy property, purchase vehicles, or open bank accounts from July 1, as part of a broader move to increase tax compliance.
While the government believes these steps will support the real estate sector, property experts have criticised the relief measures, calling them insufficient. They argue that the crisis in the real estate industry is deep-rooted and requires a more serious and long-term strategy.
Citizens, especially non-filers, have also expressed concern over the new condition, saying that banning non-filers from buying property is unfair and will create further hurdles for the middle class.
