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Big Relief Incoming! Govt to Scrap 3% FED on Property Sales – Game Changer for Pakistan’s Real Estate Market?

In a major move that could reshape Pakistan’s real estate landscape, the federal government has officially decided to abolish the 3% Federal Excise Duty (FED) on the first sale of all residential and commercial properties — a decision taken after consultation with the International Monetary Fund (IMF).

This bold step is aimed at boosting real estate investment, improving affordability for first-time homebuyers, and revitalizing the construction sector amid ongoing economic challenges.

✅ What’s Being Abolished?

According to reports, the government will eliminate:

3% FED on property sales for tax filers
5% tax for late filers
7% tax for non-filers

This tax was previously collected during booking, allotment, or transfer of plots, apartments, and houses.

Now, with Finance Minister Muhammad Aurangzeb’s approval, a legislative process has been initiated to scrap the tax completely by the end of April.

💬 What Prompted This Decision?

The Prime Minister’s Housing Task Force played a key role in recommending the rollback
The decision aligns with IMF discussions, though the Fund has not yet publicly endorsed the reversal
The aim is to make property transactions more transparent, efficient, and accessible

🏠 What Other Real Estate Reforms Are on the Table?

The housing task force has proposed several major changes to support low-cost housing and revive construction activity:

📉 Abolish Deemed Income Tax on properties
📜 Harmonize Stamp Duties across all provinces
🧾 Remove Capital Value Tax (CVT) in Islamabad
🏘️ Tax Exemptions for First-Time Buyers & Affordable Housing Projects
💼 Slab-Based Capital Gains Tax System to replace flat rate
🧱 Rationalize Taxes on Construction Materials to cut building costs

📉 Policy Rate Reduction Rejected

While the task force also pushed for lowering the State Bank’s interest rate to single digits to stimulate housing and construction, both the IMF and SBP declined the proposal, citing inflation control concerns.

💸 More Relief on the Horizon?

The government is also considering abolishing the 10% income tax surcharge currently levied on individuals earning over Rs. 10 million annually, providing additional breathing room for high-net-worth individuals and business owners.

🔍 Why This Matters for Pakistan’s Economy

✅ Boosts investor confidence in the real estate sector
✅ Encourages documentation of property transactions
✅ Reduces tax burden on homebuyers and builders
✅ Supports job creation in allied industries like steel, cement, and construction labor

📊 Final Thoughts

This FED rollback marks a critical turning point for Pakistan’s property and construction sectors. With fewer taxes, simplified procedures, and greater affordability, the market could witness a surge in activity, especially from overseas Pakistanis and first-time investors.

📣 But all eyes now turn to the IMF’s final stance on this reversal — will it support Pakistan’s housing-led growth plan or push back against revenue losses?

📰 Stay ahead of every policy shift, tax change, and property market update—only on www.dailyforex.pk – your go-to platform for real estate, forex, gold, economy, and financial news for Pakistan.

Hamza Shah