The federal government is set to abolish the 3 to 7 percent Federal Excise Duty (FED) imposed on the transfer of plots and commercial properties, a move aimed at revitalizing Pakistan’s real estate sector.
Officials from the Federal Board of Revenue (FBR) confirmed that Prime Minister Shehbaz Sharif has already approved the removal of this levy, which was introduced via the Finance Act 2024. The FBR has submitted a formal summary to the federal cabinet for final approval.
To carry out the change, the government may either issue a Presidential Ordinance or table a Bill in Parliament. However, sources suggest that a Bill is the more likely route to swiftly eliminate the FED.
Once approved, the government will also discontinue the Computerized Payment Receipt (CPR-FE) system for collecting the 3–7% FED on property allotments and transfers. This will apply to both commercial properties and the initial transfers or allotments of open plots and residential units.
The FED, introduced to generate additional revenue, has reportedly fallen short of its targets during the first half of fiscal year 2024–25. The collected amount so far has been negligible, prompting reconsideration of the measure.
Currently, developers and builders are required to collect the FED at varying rates:
- 3% if the buyer is listed as an active taxpayer,
- 5% if the buyer failed to file a return by the due date, and
- 7% if the buyer is not on the active taxpayer list.
The FBR had also introduced two forms for this process—Form A for payment receipts and Form B for buyer and transaction details.
