The federal government is poised to eliminate the 3 to 7 percent Federal Excise Duty (FED) on property transactions, a move aimed at providing relief to the real estate sector.
Business Recorder reported, citing senior officials from the Federal Board of Revenue (FBR), that Prime Minister Shehbaz Sharif has already approved the removal of this duty, and the FBR has submitted a summary to the federal cabinet for approval.
The government is considering two options to formalise the abolition: issuing a Presidential Ordinance or presenting a Bill in Parliament. However, sources indicate that a Bill in Parliament is the more likely route for the immediate removal of the FED on property transactions.
In addition to the duty, the government will also withdraw the Computerised Payment Receipt (CPR-FE), which was used to collect the FED on the allotment or transfer of commercial properties and the first transfer or allotment of residential plots.
Under the current structure, the FED on commercial property transfers and first allotments of open plots or residential property was set at 3 percent for active taxpayers, 5 percent for non-filers, and 7 percent for buyers not on the active taxpayer list.
This move to abolish the FED reflects the government’s response to the underperformance of the policy, which has failed to generate significant revenue.
This decision is expected to ease the burden on developers and buyers and provide a much-needed boost to Pakistan’s real estate market.
