PM Shehbaz to Approve Housing Sector Tax Reforms & Growth Plan

PM Shehbaz to Approve Housing Sector Tax Reforms and Growth Plan (Islamabad: Major Real Estate and Housing Reforms Expected on February 6)

Prime Minister Shehbaz Sharif is set to approve a significant policy package on February 6, 2025, aimed at revamping Pakistan’s housing and real estate sector. The proposed reforms, developed by the Housing Sector Task Force, focus on tax rationalization, financing accessibility, and policy standardization to promote investment and economic growth.

Key Focus Areas of the Reform Package

The upcoming meeting, chaired by PM Shehbaz, will review key challenges in the housing sector and finalize a growth framework to attract investment. The recommendations include:

• Abolishing Section 7E of the Income Tax Ordinance to streamline property transactions.
• Waiving sub-section 2A of Section 236C, removing the requirement for 7E declaration and commissioner approval.
• Exempting properties valued up to Rs 10 million from taxation to encourage investment in affordable housing.
• Implementing an online NADRA verification system for non-resident property buyers.
• Standardizing and rationalizing stamp duties across Islamabad, provinces, and the ICT.
• Abolishing Capital Value Tax (CVT) in Islamabad to remove financial barriers.
• Ensuring a uniform tax rate for both filers and late filers to eliminate disparities.
• Waiving wealth reconciliation requirements for investments up to Rs 50 million in real estate and construction.
• Revising property valuations every three years to reflect market rates.
• Introducing tax exemptions on transaction taxes for low-cost housing, government plots, and first-time homebuyers.

Short-Term Measures to Revitalize the Real Estate Sector

To improve investor confidence and stimulate growth in the real estate sector, the Task Force has also recommended several short-term measures:

• Reducing policy rates to a single digit to encourage real estate financing.
• Resuming the Mera Pakistan Mera Ghar (MPMG) scheme to restore developer and buyer confidence.
• Reintroducing mark-up subsidies on low-cost housing loans to make homeownership more accessible.
• Launching awareness campaigns and financial literacy programs to educate buyers on investment opportunities.
• Collaborating with real estate developers to introduce mortgage financing options with fixed terms of 5, 10, and 20 years.

Why These Reforms Matter for Pakistan’s Housing Sector

The real estate and construction industry is a key driver of economic growth in Pakistan, contributing to employment generation and financial stability. However, rising taxation, inconsistent policies, and lack of financing options have hindered investment and slowed property transactions.

• Real estate transactions have dropped by more than 50 percent due to increased taxes.
• High transaction costs are leading investors to seek alternatives in foreign markets.
• Developers are facing financial challenges, causing delays in housing projects.

With these reforms, the government aims to create a more transparent and stable property market, attract both local and foreign investors, and provide affordable housing options for the public.

Conclusion: A Game-Changer for Pakistan’s Real Estate Market

PM Shehbaz’s approval of this reform package marks a crucial step in reshaping Pakistan’s housing sector. If implemented effectively, the proposed tax reforms and financing initiatives will increase investment, boost homeownership, and revive the real estate market.

As the government prepares to roll out these reforms, the role of the National Tax Council and provincial authorities will be essential in ensuring their successful execution. Further updates will be available in the coming weeks as the process moves forward.

Ref: https://www.brecorder.com/news/40346535/