2 min read
Prime Minister Shehbaz Sharif has postponed a decision on the proposed tax incentive package for the real estate sector, citing the need to address key concerns before moving forward.
According to sources, the Federal Board of Revenue (FBR) has rejected a proposal to provide tax relief of up to Rs. 50 million for first-time buyers of homes, shops, or offices. The FBR cited a restriction imposed by the International Monetary Fund (IMF), which prohibits such exemptions. FBR Chairman Rashid Langrial argued that the proposal would effectively amount to tax evasion, making it unacceptable to the IMF.
Discussions on Tax Cuts and FED Removal
During a meeting of the housing sector task force, officials considered reducing property transaction taxes and eliminating the 3% federal excise duty (FED) on real estate. While the FBR chairman supported removing the duty, some task force members raised concerns that tax cuts could fuel real estate speculation.
The government is also exploring interest rate subsidies to make home loans more accessible for low- and middle-income buyers, aiming to improve housing affordability.
Pakistan’s real estate market remains largely unregulated, with agricultural land frequently converted into housing societies without proper approvals. Fraudulent sales of plots and apartments continue to be a concern, while the market also faces an oversupply of plots, leading to further instability.
The government’s final decision on the tax package will likely depend on balancing economic incentives with regulatory and fiscal considerations.
