Govt Proposes Major Tax Relief to Boost Property and Construction Sectors

ISLAMABAD: In a bid to revitalize Pakistan’s property and construction sectors, the federal government has unveiled a series of groundbreaking proposals aimed at providing relief to investors and facilitating smoother transactions. The proposed measures include significant tax reductions and making property purchases easier for non-filers, as well as offering incentives to attract overseas Pakistani investors.

One of the most noteworthy proposals suggests that non-filers will now be allowed to purchase properties valued up to Rs10 million. This move marks a major shift from the existing regulations, which previously restricted non-filers from engaging in high-value property transactions.

To further encourage investment in the sector, the government is contemplating several tax cuts, including:

• A reduction in the tax under Section 236C (sale of property).
• Lowering the property transaction tax from the current 4% to between 1.5% and 2%.
• Cutting the tax on property purchases from 3% to just 0.5%.

Currently, property transactions in Pakistan are subject to a combined tax rate ranging from 11% to 14%, which many stakeholders have argued discourages potential investors. With these tax cuts, the government aims to make property transactions more attractive and foster greater market activity.

In addition to these tax cuts, the government has also proposed a slight increase in certain property taxes, such as raising the sale and purchase tax from 4% to 4.5%. This is designed to balance revenue generation while providing overall relief in other areas.

A key aspect of the government’s strategy is to facilitate overseas Pakistanis who wish to invest in the property market. Proposals for this include:

• Enabling overseas Pakistanis to register online with the National Database and Registration Authority (NADRA) for property transactions.
• Providing a facility for filers to declare property worth Rs50 million in their wealth statements.

The federal government, under the leadership of Prime Minister Imran Khan, had formed a task force to address challenges in the construction sector. The Ministry of Housing and Works has submitted these recommendations to the Federal Board of Revenue (FBR), with the aim of boosting economic activity, creating jobs, and attracting more investments into the sector.

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With these measures, the government hopes to stimulate growth in the property market and the broader construction industry, benefiting both local and overseas investors, and contributing to Pakistan’s overall economic recovery.