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Major Boost for Real Estate: Govt to Abolish 3–7% FED on Property Transfers Soon

In a major move to revive Pakistan’s struggling real estate sector, the federal government is preparing to abolish the 3% to 7% Federal Excise Duty (FED) imposed on property transfers, including commercial plots and residential land. This decision follows Prime Minister Shehbaz Sharif’s approval and is now being fast-tracked through the federal cabinet, according to senior FBR officials.

The withdrawal of this tax is expected to stimulate property transactions, increase investment in the construction sector, and ease the financial burden on buyers and developers alike.

🏛️ Options on the Table: Ordinance or Parliamentary Bill?

To officially repeal the FED, the government is weighing two options:

📜 Issue a Presidential Ordinance for swift implementation
🏛️ Introduce a Bill in Parliament — the more likely route, sources say

Either path aims to eliminate the FED immediately, particularly on the first allotment or transfer of open plots and commercial/residential properties.

💡 Why the FED Is Being Scrapped

Introduced in the Finance Act 2024, the 3–7% FED on property transactions was aimed at boosting revenue. However, the measure has failed to generate significant income, with negligible collections reported in the first half of FY2024–25.

The tax burden also discouraged investors and buyers, slowing down property transfers and impacting the broader economy. By reversing this measure, the government is hoping to unlock real estate activity and stimulate growth.

🧾 What Was the FED Structure Before This Move?

Currently, developers and builders are required to collect FED on initial transfers or allotments:

✅ 3% FED for buyers listed as active taxpayers (ATL) under Section 181A of the Income Tax Ordinance
⚠️ 5% FED if the buyer filed late tax returns
❌ 7% FED if the buyer is not on the ATL at the time of purchase

These payments were processed via Form-A and Form-B, detailing buyer credentials and FED receipts (CPR-FE).

Once the abolition is finalized, these payment forms and procedures will be completely withdrawn, streamlining the transfer process.

📉 What This Means for Investors and the Economy

✅ Lower transaction costs for property buyers
✅ Greater liquidity in real estate markets
✅ Increased demand for both residential and commercial plots
✅ Boost for construction and allied industries

Real estate experts believe this decision will help reignite investor interest, particularly in urban commercial hubs and housing schemes, which saw stagnation due to the added tax burden.

📢 Final Word: A Timely Relief for a Key Economic Sector

The move to abolish FED on property transfers could not have come at a better time. With the government pushing to increase investment, create jobs, and stabilize economic growth, revitalizing the real estate and construction sector is crucial.

This policy reversal is a strong signal that the government is listening to market feedback — and is willing to pivot in favor of long-term development.

📢 For the latest updates on real estate tax reforms, FBR policies, and investment opportunities in Pakistan’s property market, follow www.dailyforex.pk — your one-stop source for economic insights that matter.