The government is reportedly contemplating a significant reduction in tax rates on property transactions, particularly targeting high-value properties, in a bid to rejuvenate the property market.
Sources suggest that the proposed changes include a substantial cut in taxes on properties valued over Rs100 million, along with a reduction in advance tax for filers from the current 4% to just 0.5%.
The Federal Board of Revenue (FBR) is said to have already started working on the proposals for these tax reductions. The Prime Minister has also reportedly instructed authorities to expedite the process, stressing the importance of creating a more favorable environment for property transactions.
However, before finalizing these tax cuts, the government plans to consult with the International Monetary Fund (IMF) to ensure the changes align with the broader fiscal goals.
The proposed reductions are expected to stimulate investment in the property sector, boost economic activity, and offer relief to both buyers and sellers.
In a related development, the Excise and Taxation Department recently announced that houses and residential plots valued up to Rs5 million would be exempt from property tax. This decision followed approval from the Punjab cabinet, as outlined in a notification issued by the Directorate General of Excise and Taxation.
The notification also clarified that future property taxes would be based on the district collector (DC) rate, with citizens assured they would not face any additional property tax this year, according to Umar Sher Chattha, the Director General of Excise and Taxation.
Meanwhile, the Senate Standing Committee on Finance Sub-Committee, chaired by Senator Mohsin Aziz, convened on Monday, where FBR Chairman Rashid Mahmood Langrial presented measures to curb black money flow in the real estate sector.
Langrial informed the committee that the government had decided to halt the use of undeclared income and assets for property purchases. A major step was announced to ban property transactions worth more than Rs10 million made with undisclosed income. Individuals will now be required to declare their income in income tax returns for high-value property deals.
Langrial emphasized that more than 97% of property transactions in Pakistan are valued below Rs10 million, and the FBR is focusing its efforts on the 2.5% of transactions involving high-value properties. “A significant portion of undeclared money and wealth is channeled into the real estate sector,” he said.