ISLAMABAD: The Federal Board of Revenue (FBR) has submitted a summary to the federal cabinet requesting the withdrawal of Federal Excise Duty (FED) on property transactions.
“We will issue a notification after the cabinet approves the summary,” FBR Chairman Rashid Langrial told Dawn on Wednesday.
In the Finance Act 2024, the government has imposed 3 per cent FED on filers, 5pc on late filers and 7pc on non-filers. This levy is believed to have slowed down the transactions in the real estate sector.
Mr Rashid said that Prime Minister Shehbaz Shairf has already given a green signal for the FED withdrawal as the International Monetary Fund has not raised any objections to the move.
FBR chairman says IMF has no objection to move
However, the chairman said that he did not have the actual figures of the FED collection from the property transactions.
Real estate experts predict a spike in market activity if the FED is abolished since it will make property transactions more affordable for buyers and sellers.
They further said that transfer prices are already high so that this relief will make a big difference.
People hesitant to buy a home due to heavy taxation may feel more comfortable after FED removal, leading to more investment and stable property values in the next few months.
The FBR chairman stated that the notification would be issued shortly. The FED on property transactions is already in court because people have questioned it.
Regarding revising the property valuation table for tax purposes, Mr Langrial stated that the valuation tables will be addressed following the budget. “We will not make any changes in the current fiscal year,” he asserted.
Currently, property transactions are subject to multiple taxes, including Capital Gains Tax (CGT), Capital Value Tax (CVT), Advance Tax (236C & 236K), and Urban Immovable Property Tax.
The CGT applies to profits from property sales, with rates varying for filers and non-filers.
The CVT is an annual tax on the fair market value of property. Advance tax is collected on sale and purchase, with higher rates for non-filers.
The Deemed Rental Income Tax (Section 7E) also assumes a notional rental income on properties exceeding Rs25 million, taxing it at 20pc.
Published in Dawn, April 24th, 2025
