Islamabad, July 1, 2025: In a move to boost affordable housing, the government has added a new tax relief measure under Section 63A of the Finance Act 2025, offering a tax credit on interest paid for low-cost housing loans. This initiative targets individuals constructing or purchasing modest homes.
As per the provision, taxpayers can now claim a credit against profits paid on debt, rental share, or appreciation in home value—provided the housing loan is obtained from a scheduled bank, an SECP-regulated financial institution, or a government-affiliated body.
The incentive is limited to loans used for homes not exceeding 2,500 square feet of land area or flats up to 2,000 square feet. This aligns with the government’s ongoing strategy to expand access to housing for middle- and lower-income segments.
To ensure targeted relief, the maximum tax credit is capped at the lesser of either 30% of the taxpayer’s income or the actual markup paid within the defined housing size limits.
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This policy is expected to stimulate the housing sector, increase home ownership, and support economic activity through construction-related industries. Stakeholders see this as a crucial step toward easing Pakistan’s housing shortage while offering direct tax savings to homebuyers.
