ISLAMABAD – The Pakistani government is preparing to introduce significant tax reductions on high-value property transactions in a bid to rejuvenate the struggling real estate market. These measures, part of broader tax reforms and anti-money laundering initiatives, aim to stimulate investment in the sector.
The proposed changes include lowering taxes on properties valued at over Rs100 million and reducing the advance tax for tax filers to below 1 percent, down from the current 4 percent. Prime Minister has instructed officials to expedite these reforms to create a more conducive environment for property transactions.
Before implementing the tax cuts, the government plans to consult with the International Monetary Fund (IMF) to ensure alignment with Pakistan’s fiscal objectives.
Recently, the Excise and Taxation Department announced property tax exemptions for plots and homes valued up to Rs50 lakh. Approved by the Punjab cabinet, this policy links future property taxes to district collector rates.
Additionally, the government is tightening regulations on undeclared income in property transactions. Buyers of properties worth over Rs1 crore will be required to declare their income in tax returns. Since more than 90 percent of property transactions in Pakistan involve amounts below Rs1 crore, the focus is on the 2.5 percent of high-value transactions, which are often financed through undeclared money.
These reforms aim to curb illicit financial flows, promote transparency, and boost activity in the real estate sector.
