Islamabad, Feb 10: The federal government is likely to withdraw the Federal Excise Duty (FED) on the transfer of commercial and residential properties under the Finance Act 2024. This decision comes in response to lower-than-expected revenue collection during the first half of the fiscal year. The Federal Board of Revenue (FBR) is expected to propose the removal of FED on property allotments and transfers, aiming to boost real estate transactions and investment.
If approved, this measure could be implemented in the 2025-26 budget. Currently, developers and builders are responsible for collecting FED at rates varying between 3% and 7%, depending on the tax status of the buyer. However, the lack of an effective monitoring system has limited the tax’s enforcement, reducing its impact on revenue generation.
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Additionally, the government is considering lowering transaction taxes on the sale and purchase of immovable properties. The Taskforce on Housing Sector Development has put forward recommendations to further incentivize the real estate market. These include abolishing the Capital Value Tax (CVT) in Islamabad, standardizing stamp duties across different provinces, and introducing tax exemptions on real estate investments up to Rs. 50 million.
By implementing these reforms, the government aims to enhance transparency, stimulate the property sector, and attract both local and foreign investors. The proposed tax adjustments are expected to create a more favorable environment for real estate development while addressing existing challenges in tax compliance and collection.
