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Aftab Maken
The government has prepared an incentive package for the public in the real estate and housing sector. To boost business activities in the property sector, a significant reduction in tax rates is also worked out.
The 11-member task force of the Ministry of Housing has formulated more than 40 key recommendations and proposals, based on which a package of incentives for the public in the real estate and housing sector has been prepared.
The government has decided to review the taxes imposed on the property and housing sector in the last budget and has developed a comprehensive plan for its revival. In this regard, the 11-member task force’s recommendations have been presented to Prime Minister Shehbaz Sharif.
The Prime Minister has scheduled an important meeting on February 3 to decide on these recommendations.
One of the recommendations presented to the Prime Minister is to allow the construction of up to three stories for residential houses. Similarly, a complete tax exemption for first-time home buyers has been suggested. Additionally, there is a proposal to revise federal and provincial taxes imposed on property transactions.
Moreover, recommendations include reducing the tax on property sales from 4% to 2%, reducing the tax on buyers from 4% to 0.5%, eliminating the federal excise duty on property transactions, and providing housing subsidies to low-income individuals. It has also been suggested to reduce taxes on housing and real estate from 14% to around 4% to 4.5%.
Another proposal is to transfer the Real Estate Regulatory Authority from the Ministry of Interior to the Ministry of Housing. Recommendations also include reviving the easy housing loan scheme and facilitating public-private partnerships for housing projects.
The Prime Minister has also been advised to allow home loans with repayment periods ranging from 5 to 20 years. In this regard, there is a proposal to grant tax exemption on taxable income up to 50 million rupees for housing.
Furthermore, the government continues its efforts to promote property business and has completed the groundwork for significantly reducing transaction tax rates.
For overseas Pakistanis, purchasing property will be made easier by reducing the advance income tax from 4% to 0.5%, decreasing federal excise duty, and eliminating the category of late filers, among other proposals.
Real estate sector experts are optimistic that implementing the government’s decisions will bring significant improvements. They believe that such measures are essential not only for the property sector but also for overall economic growth.
Experts further emphasize that Pakistan has immense potential, particularly in the real estate sector. They believe that if the government focuses on it and formulates a long-term policy—whether related to tax policies or providing incentives to allied industries—the country can base its economy on this sector.
Experts also suggest that for substantial results, the condition of disclosing the source of income on property transactions up to 30 million rupees should be removed.
FBR officials also acknowledge that the significant increase in property sector taxes during the current fiscal year has led to a 50% decline in transactions, negatively impacting tax revenue.
During the upcoming visit of the IMF’s economic review mission to Pakistan, discussions will be held on reducing tax rates in the property and real estate sector.
