In a move that has stirred mixed reactions within the real estate community, the government has announced tax relief measures aimed at boosting property transactions—but only for buyers. Sellers, on the other hand, have been hit with higher tax rates, leaving many in the industry confused and frustrated.
Buyers Get a Break
During his budget speech, Finance Minister Muhammad Aurangzeb introduced several measures to reduce the financial burden on property buyers:
• Withholding tax has been reduced across different slabs:
o From 4% to 2.5%
o From 3.5% to 2%
o From 3% to 1.5%
• The Federal Excise Duty of 7 percent on property transactions has been abolished.
• Stamp duty in Islamabad has been slashed from 4 percent to 1 percent.
These tax relaxations apply to property transactions in three value categories:
• Up to Rs 50 million,
• Between Rs 50 million and Rs 100 million,
• And over Rs 100 million.
The government also declared a tax credit for the purchase of houses up to 10 marlas and apartments up to 2,000 sq ft—a move which is intending to promote affordable housing.
Sellers Penalised, Industry Baffled
While buyers are set to benefit, property sellers are facing higher tax rates:
• Tax raised from 3% to 4.5% for properties up to Rs 50 million
• 5% for properties between Rs 50 million and Rs 100 million
• 5.5% for transactions exceeding Rs 100 million
Read more: Punjab launches crackdown on property tax defaulters and underperforming officers
This sharp increase has left many industry players like Akbar Sheikh, former Chairman of the Association of Builders and Developers (ABAD), questioning the logic behind the move.
“How can you revive the real estate sector by favouring one side of the transaction? You need both a buyer and a seller to make a deal happen,” he said.
Restrictions on Non-Filers Cause Concern
Adding to the worries, the government has proposed banning non-filers from:
• Buying property
• Purchasing vehicles
• Opening bank accounts
Asad Tariq, a realtor and developer, expressed concern over this restriction.
“Requiring filer status will only reduce the number of investors. Many ordinary citizens don’t file returns but want to invest in property. This move could paralyze the sector further.”
Unclear FED Abolition Raises Questions
While the abolition of FED was welcomed, experts pointed out that the budget speech only clearly mentions commercial properties.
“Does the removal apply to residential plots and houses too? The government must clarify,” said Mr. Sheikh.
Conclusion
Despite the government’s intention to provide relief, many of the analysts and masses keep on believing that this budget falls short of reviving Pakistan’s real estate sector. With higher taxes on sellers, restrictions on non-filers, and vague policy language, industry stakeholders are calling for clearer, more inclusive reforms. Without a balanced approach, the sector—already in a prolonged slump—may find it hard to bounce back.