Tax Relief for Property Buyers, But Higher Taxes for Sellers in New Budget

LAHORE (Web Desk) — The government has announced tax relief measures for the real estate sector by lowering some taxes on property purchases.

In his budget speech on Tuesday, Finance Minister Muhammad Aurangzeb said the withholding tax rates for property buyers have been reduced. The rates now range from 1.5% to 2.5%, down from previous rates of 3% to 4%.

The 7% Federal Excise Duty (FED) on property transactions has been removed. Stamp duty in Islamabad has also been cut from 4% to 1%.

The tax relief is divided into three categories based on property value: up to Rs50 million, up to Rs100 million, and over Rs100 million.

However, taxes for property sellers have been increased. Sellers will now pay 4.5% tax on properties up to Rs50 million, 5% on properties between Rs50 million and Rs100 million, and 5.5% on properties worth more than Rs100 million.

There is also a tax credit for smaller homes (up to 10 marlas) and apartments (up to 2,000 sq ft).

The budget includes a new rule that non-filers of tax returns will not be allowed to buy property, vehicles, or open bank accounts from July 1.

Experts say the tax relief is not enough to help the struggling real estate sector. Akbar Sheikh, former chairman of the Association of Builders and Developers, criticized the government for lowering taxes on buyers but increasing them on sellers. He said both buyers and sellers need relief for the market to improve.

He also said the government’s statement on removing the 7% FED on commercial properties was unclear about whether it applies to residential properties and plots.

Realtor Asad Tariq warned that restricting property purchases to tax filers only could harm the sector and expressed concerns about requiring detailed asset information in tax returns.