Property Tax Abolished as Govt Confirms new Amendments

The Federal Government has introduced major tax reforms in the amended Finance Bill 2025–26, offering relief to long-term homeowners while reinforcing customs enforcement and introducing new levies aimed at energy transition.

In a significant move for property owners, the government has abolished withholding tax on the sale of immovable property if it has been used as a personal residence for 15 years or more. This tax exemption will apply from July 1, benefiting homeowners who have maintained a long-term residence in a single property.

The measure was added to the bill following recommendations by the National Assembly’s Finance Committee, aiming to reduce tax burdens on families disposing of long-held homes.

No 3% FED on Property Transfers

Another relief for property stakeholders comes with the government’s decision to withdraw the proposed 3 percent Federal Excise Duty (FED) on property transfers. This reversal will help maintain affordability and encourage market movement in the real estate sector.

To accelerate the shift toward cleaner energy, the amended bill introduces an Energy Vehicles Adoption Levy on internal combustion engine (ICE) vehicles. Though hybrid vehicles are not currently excluded, the Finance Committee has recommended that the FBR consider an exemption for them.

The new levy is expected to generate Rs. 10 billion in revenue and signals the government’s intent to incentivize electric and sustainable transportation.

The bill reverses a key customs amendment: earlier plans to end tax-free courier parcel imports up to Rs. 5,000 have been dropped. However, starting July 1, only gift parcels valued at Rs. 1,000 or less will remain exempt.

In addition, the de-minimis threshold has been reduced to Rs. 500, part of an effort by the FBR to curb under-invoicing and duty evasion on low-value imports.

To ensure fairness in customs processes, the bill adds a clause blocking late and false ownership claims on seized goods. Meanwhile, new customs regulations will be introduced to protect importers affected by clearance delays outside their control. Penalties may be waived in such cases at the discretion of customs collectors.

Due Process Ensured in Tax Fraud Cases

Responding to concerns raised in the Senate, the amended bill includes new safeguards against arbitrary arrests in tax fraud cases. Going forward, no arrest will be made without due process, aiming to preserve the rights of taxpayers while still enabling enforcement.

The amended Finance Bill 2025–26 offers both relief and regulation. It reduces tax pressure on homeowners.
Additionally, it revises rules for property transfers and enforces stricter customs controls. It also introduces new levies to support Pakistan’s energy goals.