Federal Board of Revenue (FBR) Chairman Rashid Mahmood has agreed in principle to reduce withholding taxes on property sales and purchases and reconsider the 5% Federal Excise Duty (FED) on property transactions to provide tax relief for first-time homebuyers and promote affordable housing schemes.
According to a news report, this was discussed during a meeting of the Taxation Working Group of the Task Force for Housing Sector Development, chaired by the FBR chairman. Stakeholders highlighted concerns over the high transaction taxes under Sections 236C and 236K of the Income Tax Ordinance, which have surged to 13% per transaction, comprising 4% withholding tax, 5% FED, and 4% provincial stamp duty.
The chairman assured participants of his commitment to rationalise taxes, subject to provincial cooperation in maintaining tax levels on real estate. He emphasized the need to streamline verification processes for non-residents through an online system in collaboration with NADRA, reducing dependency on field offices.
However, he maintained a firm stance against granting concessions to non-filers.
A committee, led by FBR Member (Policy) and including representatives from real estate and housing sectors, was formed to address tax reforms and propose measures for low-cost housing.Â
The committee will align property valuation rates with market values, conduct annual reviews, and propose a robust valuation mechanism in collaboration with Inland Revenue Operations.Â
Concerns over the income tax on deemed income under Section 7E were also raised, including its impact on idle and undeveloped plots. The chairman agreed to review these concerns and address design inconsistencies.
Real estate stakeholders expressed optimism about the upcoming incentive package, expected to be finalised by February 2025.
