ISLAMABAD, April 25 — The federal cabinet is poised to abolish the 3 to 7 percent Federal Excise Duty (FED) on the transfer and first allotment of plots and commercial properties, a levy introduced via the Finance Act, 2024, in an effort to boost the sluggish real estate sector.
According to senior officials at the Federal Board of Revenue (FBR), Prime Minister Shehbaz Sharif has already approved the move, and a formal summary has been submitted to the cabinet for ratification. The government is considering either issuing a Presidential Ordinance or introducing a Bill in Parliament to formally withdraw the tax.
The measure was originally implemented to enhance revenue collection but failed to yield significant returns in the first half of FY25. Sources said the Computerized Payment Receipt (CPR-FE), required for processing property transfers under this duty, will also be rescinded.
Under the current regime, FED is applied as follows:
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3% for buyers listed as active taxpayers under Section 181A of the Income Tax Ordinance,
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5% for late filers, and
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7% for non-filers.
Developers and builders were obligated to collect the FED at the time of the first allotment or transfer of residential plots or commercial properties, with documentation required through Form-A (CPR-FE) and Form-B detailing transaction specifics.
With this rollback, the government hopes to remove friction in property transactions, incentivize investment, and revive demand in the construction and real estate sectors, which have remained subdued under the weight of tax and documentation measures.
