Tax Relief on Property Sales: FBR Chairman Announces Major Cuts

Tax Relief on Property Sales: FBR Chairman Announces Major Cuts

In a groundbreaking move, Federal Board of Revenue (FBR) Chairman Rashid Mahmood has announced significant tax reforms aimed at revitalizing Pakistan’s real estate market by Tax Relief on Property Sales. This includes plans to reduce withholding taxes on property transactions and reconsider the 5% Federal Excise Duty (FED) on property sales, a move that promises much-needed relief for first-time homebuyers and affordable housing schemes.

Key Decisions to Stimulate the Housing Sector – Tax Relief on Property Sales

The announcement came during a meeting of the Taxation-Task Force for Housing Sector Development. Here’s a detailed look at the outcomes of the session:

1. Reduction in Withholding Taxes

Current taxes on property transactions stand at a burdensome 13% (4% sale/purchase, 5% FED, and 4% provincial stamp duty). The FBR Chairman agreed in principle to reduce these taxes, provided provincial authorities commit to maintaining their current rates.

2. Reconsidering the 5% Federal Excise Duty (FED)

The high FED on property transactions has been a barrier for many buyers. The FBR plans to review this tax to encourage transaction volume and affordability.

3. Strict Measures Against Non-Filers

While adopting a lenient approach to tax relief, the FBR remains firm on non-filers, ruling out any concessions. For non-residents, an online verification process in collaboration with NADRA is being developed to simplify tax compliance.

Formation of a Special Committee | Tax Relief on Property Sales

A special committee has been established to rationalize transaction taxes at both federal and provincial levels. Members include industry leaders and policymakers:

• Ahsan Malik (Real Estate Analyst)
• Sardar Tahir Mehmood (President, Federation of Realtors, Pakistan)
• Maj General Aamir Aslam (Chairman, NAPHDA)
• Hafiz Mian M Nauman (Ex-MPA)
• Waseem Hayat Bajwa (DDG Policy & Planning Wing, MoH&W)

Aligning Property Valuation with Market Rates

One of the most significant reforms is aligning property valuation rates with market values. This measure, to be reviewed annually, aims to enhance transparency and ensure fair taxation.

Addressing Section 7E and Other Concerns

Concerns regarding Section 7E, which imposes income tax on deemed income, were also discussed. The FBR Chairman agreed to review its impact on undeveloped plots and potential double taxation, forming a joint committee to resolve inconsistencies.

Enhanced DNFBPs Directorate for Transparency

The Directorate General of Designated Non-Financial Business and Professions (DNFBPs) will receive additional resources, including workforce, funding, and digital tools, to improve transparency in the real estate sector.

Optimism Around February 2025 Incentive Package

Real estate analyst Ahsan Malik expressed hope regarding an upcoming incentive package, expected in February 2025. This package is anticipated to provide benefits for first-time homebuyers and bolster affordable housing schemes across the country.

Conclusion

The FBR’s proactive approach to slashing taxes and addressing real estate concerns is a major step towards reviving Pakistan’s housing sector. These reforms are expected to reduce financial barriers for buyers, stimulate market activity, and promote affordable housing for all.

Stay tuned for updates on the February 2025 incentive package and more insights into Pakistan’s evolving real estate landscape.

REF: https://www.brecorder.com/news/40342196

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