With the start of June 2025, the Pakistani government is preparing to announce the federal budget for the upcoming fiscal year 2025-26. Sources suggest it could be announced ahead of Eid. This time, the real estate sector is getting special focus because it’s seen as a key industry that can boost the economy. So, in this article, we will discuss the possible tax reforms, government plans, and benefits for investors.
Expected Tax Reforms in the Real Estate Sector
Recent reports suggest that the government of Pakistan is preparing substantial tax relief initiatives to revitalize the real estate sector. Key proposals under consideration include:
Reduction in Withholding Tax
- Current System: Right now, both buyers and sellers pay two separate withholding taxes.
Proposed Change: Introduction of a single withholding tax fee, instead of two, to streamline transactions.
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Abolishment of Federal Excise Duty (FED)
A proposal is under review, and they’re considering a plan to remove federal and provincial taxes on property deals.
Lower Transaction Taxes
The government plans to reduce the taxes on buying and selling property to boost the real estate market. Right now, these taxes can go up to 11%, but they might reduce the transaction tax from 3-4% down to 2-2.5%. They’re also looking to reduce the sales tax on properties from 1.5& to 2% to encourage more deals.
Abolishment of Advance and Sales Tax
The government of Pakistan may remove the advance and sales tax on construction projects. This step could help builders and developers to strengthen financially.
Simplification of Section 7E
People have been complaining that Section 7E of the Income Tax Ordinance is too complex. Now, a simpler version is being readied.
Restoration of Section 9A
They’re thinking about bringing back Section 9A under the Second Schedule to make things clearer and easier for the real estate sector.
Revival of Pakistan Real Estate Regulatory Authority (PRERA)
The government is planning to bring back PRERA (Pakistan Real Estate Regulatory Authority) to make property deals safer, more transparent, and better managed for everyone involved.
Impact on Buyers, Sellers & Investors
If these proposals are implemented, the real estate sector could see:
- Easier property transactions with lower tax burdens.
- Increased investor confidence due to simplified policies.
- Growth in construction and development projects is creating more housing opportunities.
- Higher profitability for buyers and sellers in the long term.
When Will These Changes Take Effect?
Once these are officially approved, these budget changes will start on July 1, 2025, and last until June 30, 2026. The final decision will come once the 2025-26 budget is officially announced and passed.
Stay Updated with CDB Properties
Once the budget is officially approved, we will provide a detailed analysis of its impact on the real estate sector. If you have any questions or need help with property investments, just contact CDB Properties.
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