Islamabad, Feb 16: Prime Minister Shehbaz Sharif has postponed his decision on the proposed tax incentive package for the real estate sector, as critical disagreements remain unresolved. The Federal Board of Revenue (FBR) has strongly opposed a proposal that would provide first-time buyers of homes, shops, or offices an amnesty of up to Rs. 50 million, citing restrictions imposed by the International Monetary Fund (IMF).
During a recent meeting of the housing sector task force, FBR Chairman Rashid Langrial rejected the proposed tax amnesty, stating that it would be classified as a tax exemption—something the IMF does not permit. The meeting also explored other policy measures, including reducing property transaction taxes and abolishing the 3 percent federal excise duty (FED) on real estate. While Langrial supported removing the FED, some members of the task force expressed concerns that tax reductions could fuel speculative investments, leading to artificial price hikes.
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Government Weighing Interest Rate Subsidies
In a bid to make housing more accessible, the government is also considering offering interest rate subsidies on home loans for low- and middle-income buyers. This measure aims to boost homeownership, particularly in urban areas where high property prices have made it difficult for many to afford housing.
Challenges in the Real Estate Sector
Despite its importance to the economy, Pakistan’s real estate sector remains largely unregulated. A significant issue is the unchecked conversion of agricultural land into housing societies, many of which lack regulatory approvals. Additionally, the market has been struggling with an oversupply of plots, raising concerns about fraudulent land sales and speculative trading.
The government is expected to review these issues further before making a final decision on the real estate tax package. As stakeholders push for reforms, balancing investment incentives with regulatory oversight remains a key challenge.
