In a landmark move that could significantly uplift Pakistan’s real estate sector, the federal government is preparing to abolish the 3% to 7% Federal Excise Duty (FED) on property transactions. According to senior officials from the Federal Board of Revenue (FBR), Prime Minister Shehbaz Sharif has approved the decision, and a summary has been forwarded to the federal cabinet for final approval.
What’s Changing in Pakistan’s Property Tax System?
Under the current policy, FED is imposed on commercial property transfers and the first allotment or transfer of residential plots:
- 3% FED for active taxpayers
- 5% for non-filers
- 7% for buyers not on the active taxpayer list
Additionally, the Computerised Payment Receipt (CPR-FE), used to collect FED on these transactions, is also set to be scrapped.
This taxation framework, initially introduced to enhance revenue collection, has failed to meet expectations. With limited income generated and growing concerns from stakeholders in the property market, the government has now opted for a strategic shift.
How Will the FED Be Abolished?
The government is considering two possible approaches to formalize the FED removal:
- Issuing a Presidential Ordinance
- Presenting a Bill in Parliament
Sources suggest that passing a Bill in Parliament is the more probable route, offering a clearer and more permanent legal pathway for the change.
Positive Impact on the Real Estate Sector
This decision marks a significant step in reviving real estate investment in Pakistan. Removing the FED is expected to:
- Lower the cost of property transactions
- Encourage new developments
- Attract both local and overseas investors
- Provide relief to genuine homebuyers and developers
With lower entry barriers, the market is likely to see increased activity in both residential and commercial real estate sectors, boosting overall economic confidence.
What This Means for Buyers and Sellers
For property buyers and sellers in Pakistan, especially in major cities like Karachi, Lahore, and Islamabad, this is a welcome development. It could lead to:
- Reduced upfront costs for property transactions
- A more investor-friendly environment
- Revitalized real estate listings and demand
As the government moves forward with this game-changing policy, all eyes are on the federal cabinet and Parliament. The removal of the FED is not just a tax reform—it’s a catalyst for growth in Pakistan’s housing and property sector.
Stay tuned to PropertiesPakistan.com for real-time updates and expert insights on this and other key developments in the real estate market.
