Withholding tax on immovable property sales to be abolished in Finance Bill 2025-26

The amended Finance Bill (2025-26) will remove the withholding tax on sales of immovable properties for individuals who have lived in the property for personal use for 15 years or more, effective from July 1, 2025, according to a news report. 

The amendment, incorporated into the bill following a recommendation by the National Assembly Standing Committee on Finance, aims to simplify the tax process for long-term property owners.

The bill proposes several major changes to federal tax laws, including a revision of the sales tax law in line with the Supreme Court’s ruling in the Taj Company case. These revisions focus on improving safeguards for arresting individuals involved in tax fraud and the registration of FIRs against them.

The Finance Bill also suggests the abolition of the Energy Vehicles Adoption Levy on hybrid vehicles, pending consultation with the International Monetary Fund (IMF). 

The FBR chairman noted that the levy, which is expected to generate Rs10 billion in revenue, currently excludes hybrid vehicles, and the IMF has been consulted on this exemption.

A significant change in the customs law has been proposed, reducing the duty-free import limit for small courier and postal parcels from Rs5,000 to Rs1,000 starting July 1, 2025. This move aims to curb misuse of the duty-free facility, which has been exploited by importers declaring small parcels as gifts. 

The National Assembly Standing Committee on Finance rejected the FBR’s proposal for a blanket disallowance of duties on small parcels, with the de-minimise limit now set at Rs500 to address loopholes.

The bill also includes provisions to prevent frivolous claims of ownership for goods subject to confiscation. The FBR has introduced new rules for the scrapping and mutilation of goods at ports, which will now only apply to genuine requests, limited to 10% of the total cargo. 

Additionally, the bill may amend the Customs Act to protect importers’ interests in cases of unavoidable delays, allowing the Collector of Customs to waive penalties in exceptional circumstances.