Budget 2025: No Withholding Tax for Homeowners Living in Property for 15 Years or More
ISLAMABAD – In a significant move under Budget 2025–26, the federal government has removed the withholding tax on immovable properties that have been owned and occupied by individuals for 15 years or longer. This relief aims to support long-term homeowners and will be effective from July 1, 2025, as per amendments made in the Finance Bill 2025–26.
The Federal Board of Revenue (FBR) introduced this change to ease the tax burden on residents who have stayed in the same home for over a decade and a half. The updated Finance Bill also includes several reforms intended to enhance taxpayer protections and ensure fair tax enforcement.
Among the notable reforms is the adoption of all Senate-recommended safeguards that require due process before arresting individuals in tax-related fraud cases. This marks a step toward more transparent and accountable tax procedures.
Additionally, the bill introduces the Energy Vehicles Adoption Levy Act 2025, which will apply to all manufacturers, assemblers, importers, and suppliers of internal combustion engine (ICE) vehicles. However, there is mounting pressure to exclude hybrid vehicles from this new levy.
Key Property Tax Updates in Pakistan – 2025
| Tax Type | Applicability | Rate / Details |
|---|---|---|
| Capital Value Tax (CVT) | All immovable property | 2% of Fair Market Value annually |
| Deemed Rental Income (Sec 7E) | Properties valued over PKR 25 million | 5% of FMV taxed at 20% annually |
| Rental Income Tax | Rental income earned | 0%–50% (slab-based, varies by filer status) |
| Urban Immovable Property Tax | Owned urban property | Levied by provinces; rates vary by location |
| Agricultural Income Tax | Agricultural land | Exemptions: Punjab up to 400,000; Sindh/KPK up to 600,000 |
When Selling Property
| Tax Type | Criteria | Rate / Details |
|---|---|---|
| Capital Gains Tax (CGT) | Profit from sale | Before July 1, 2024: 15%, reducing to 0% over 6 years; After: Flat 15% |
| Advance Tax on Sale (Sec 236C) | On sale transaction | Filer: 3–4%, Late Filer: 6–8%, Non-Filer: 10% (based on property value) |
When Buying Property
| Tax Type | Criteria | Rate / Details |
|---|---|---|
| Advance Tax on Purchase (236K) | On purchase | Filer: 3–4%, Late Filer: 6–8%, Non-Filer: 12–20% (based on value) |
| Bank Channel Requirement (75A) | For payments over PKR 5 million | Must be made via bank transfer |
This reform package signals the government’s intent to simplify the property tax regime while protecting genuine homeowners and increasing compliance across the real estate sector.
