Government to Likely Remove Excise Duty on Property Transfers
The government is considering removing the excise duty (FED) on the transfer of plots and commercial properties. This decision comes after the federal government noticed low tax revenue collected from this duty in the first half of the current fiscal year.
The FBR is most likely to present before the House its proposal for doing away with FED on allotments and transfer of property. If that were to be agreed upon, this could feature in the 2025-26 budget.
Currently, property developers and builders must collect excise duty on commercial and residential property transfers. The duty rates vary between 3% to 7%, depending on the buyer’s tax status. However, the lack of proper monitoring has made this tax less effective.
At the moment, the duty is collected as follows:
3% on the total amount if the buyer is listed as an active taxpayer.
5% if the buyer hasn’t filed his income tax return
7% if the buyer is not on the active taxpayers’ list
Taxation on the buying and selling of properties is also being thought to be reduced. A housing task force has proposed eliminating the CVT from Islamabad and suggested reducing stamp duties across the provinces. Also, the same report indicates that investors in real estate should be exempted from tax up to Rs. 50 million.
This change could make property transactions easier and more affordable for developers, builders, and buyers in the future.
