The federal government has proposed major reductions in withholding taxes on property transactions to encourage activity in Pakistan’s real estate and construction sectors.
Under the proposal, withholding tax on property purchases for tax filers will be cut by 50%, reducing the rate from up to 2.5% to 1.25%. Similarly, the tax on property sales is expected to decrease from up to 5.5% to 2.75%.
Officials say the objective is to make property transactions more affordable and encourage greater participation in the formal real estate market. Lower transaction costs could motivate buyers and sellers who have been delaying investment decisions due to higher taxes.
The government believes the proposed relief will help revive market activity and support economic growth. A stronger property sector often benefits several related industries, including cement, steel, paint, construction materials, transportation, and other services connected to housing and infrastructure development.
Experts say reduced taxes may improve investor confidence and increase the number of documented transactions. Greater activity in the property market could also contribute to job creation and stimulate business opportunities across multiple sectors of the economy.
The proposed measures are expected to benefit tax filers by lowering the overall cost of buying and selling property. Authorities hope the changes will encourage more people to conduct transactions through official channels and strengthen the documented economy.
The proposal is part of broader efforts to support investment and economic activity through targeted tax relief. If approved, the revised tax rates could provide a significant boost to the real estate sector and help accelerate construction-related activities across the country.
Industry stakeholders are closely monitoring the proposal and believe it could play an important role in improving market sentiment and supporting long-term growth in the property sector.
