The federal government has introduced significant tax relief measures for the real estate sector in the 2024-25 budget, but industry players remain divided, expressing disappointment over what they term a half-hearted attempt to revive the struggling market.

In his budget speech, Finance Minister Muhammad Aurangzeb announced reductions in key taxes on property transactions. The withholding tax for property buyers has been lowered across different transaction slabs: from 4% to 2.5% for properties under Rs50 million, from 3.5% to 2% for those between Rs50 to Rs100 million, and from 3% to 1.5% for transactions exceeding Rs100 million. Additionally, the government has abolished the 7% Federal Excise Duty (FED) on property transactions and cut stamp duty in Islamabad from 4% to just 1%.

On the selling side, however, taxes have been increased. Sellers will now face 4.5% tax on property transactions up to Rs50 million, 5% for properties valued between Rs50 to Rs100 million, and 5.5% for those above Rs100 million. The budget also includes tax credits for houses up to 10 marlas and apartments up to 2,000 square feet.

Another major development is the proposal to ban non-filers from purchasing property, vehicles, or opening bank accounts. This clause has sparked widespread concern among investors and non-filers, who argue that it may restrict economic participation and discourage investment.

Industry leaders are skeptical. Akbar Sheikh, former Chairman of the Association of Builders and Developers (ABAD), criticized the measures, saying, “The relief seems contradictory. While the buyer is incentivized, the seller is penalized. How can transactions grow if both parties are not equally supported?”

He also pointed out the vagueness in the government’s announcement on the abolition of FED, questioning whether residential properties are included or only commercial ones.

Developer Asad Tariq echoed these concerns, warning that the restriction on non-filers will further suppress an already stagnant real estate market. He emphasized that the added requirement of filing asset declarations may also deter potential investors.

While the tax cuts for buyers are a positive step, stakeholders argue that a more balanced and inclusive policy—especially towards sellers and non-filers—is essential to ensure real estate recovery and sector-wide growth in 2025.

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