During ongoing discussions for Pakistan’s 2025–26 federal budget, the International Monetary Fund (IMF) has urged the government to raise the Capital Gains Tax (CGT) on property sales.
According to sources, the CGT could potentially be increased from the current 15% to up to 40%, aligning it with the corporate income tax rate.
Virtual negotiations between the Ministry of Finance, the Federal Board of Revenue (FBR), and the IMF are currently underway. The IMF is pushing for wider tax reforms aimed at improving Pakistan’s tax-to-GDP ratio, with a target of 11% for the upcoming fiscal year. Meanwhile, government expenditures are projected to reach 20.3% of GDP.
FBR officials contend that significant profits generated through real estate deals are currently under-taxed, justifying a hike in CGT. However, there are concerns that such a steep increase could negatively impact real estate market activity.
To mitigate the effects, officials are also considering offering tax relief for first-time property buyers. This measure would aim to protect genuine homebuyers while ensuring additional revenue generation.
As these discussions progress, major fiscal policy decisions — including tax adjustments — are expected to play a critical role in shaping the final version of the federal budget.
