Islamabad, Apr 16, 2025: The government has decided to eliminate the 3% Federal Excise Duty (FED) on the first sale of all properties, including residential and commercial units.
This move follows consultations with the International Monetary Fund (IMF).
The FED, which previously included an additional 5% tax for non-filers, will be completely removed.
A formal proposal has already been submitted, and Finance Minister Muhammad Aurangzeb has authorized the initiative.
The government aims to remove the tax by the end of April.
The Prime Minister’s Housing Task Force had advocated for the removal of the FED, and the necessary legislative changes will be introduced soon.
Originally, the FED applied to the first sale of all types of properties—whether houses, plots, or apartments—with a rate of 3% for filers, 5% for those filing late, and 7% for non-filers.
This tax was collected during booking, allotment, or transfer.
The IMF has not yet publicly supported the repeal of this duty.
The housing task force also recommended eliminating the deemed income tax on properties and suggested streamlining stamp duties across regions.
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It called for the removal of the capital value tax in Islamabad and proposed exemptions for first-time homebuyers and affordable housing initiatives.
Furthermore, the task force recommended reintroducing a slab-based system for capital gains tax and rationalizing taxes on construction materials to help reduce building expenses.
Despite calls for a reduction in the central bank’s policy rate to single digits to boost the real estate sector, both the IMF and the State Bank of Pakistan rejected this idea.
Additionally, the government is considering removing the 10% income tax surcharge currently imposed on individuals earning over Rs. 10 million per year.
