First Property Transactions
The government is considering a significant policy change by abolishing the Federal Excise Duty (FED) on the first property transaction, sources within the Finance Ministry revealed. This move is expected to provide much-needed relief to property buyers and encourage investment in the real estate sector.
The proposal has reportedly received approval from the International Monetary Fund (IMF) as part of broader economic reforms aimed at boosting economic activity.
Currently, the FED on property transactions varies based on the tax status of buyers. Tax filers are subject to a 3% FED, while late filers pay 5%, and non-filers face the highest rate of 7%. If implemented, the proposed policy would waive this duty entirely on the first transaction of a property.
However, any subsequent transactions involving the same buyer would continue to be taxed under the existing structure. Despite this relief, all other withholding taxes related to real estate transactions will remain in place, as per the Federal Board of Revenue (FBR).
While this tax relief is aimed at benefiting property buyers, sources confirm that no changes are planned regarding the tax rate on property sellers. The government sees this approach as a way to stimulate real estate investment without compromising overall revenue collection.
Meanwhile, the IMF has reportedly suggested further reductions in taxes on real estate transactions. However, some opposition exists within policy circles, as concerns remain about the potential impact on government revenue.
In a separate development, the IMF recently approved a reduction of Re1 per unit in electricity tariffs, offering financial relief to consumers nationwide. This reduction will be funded through revenue generated from a levy imposed on captive power plants that rely on natural gas.
Additionally, the government is working on finalizing a broader relief package for electricity consumers. This package aims to provide further financial support to struggling households and industries.
However, its implementation remains contingent upon IMF approval, as the government seeks to balance economic relief measures with fiscal sustainability.
