Government Considers Tax Relief for Investors in Property Sector, But Tightens Rules for Tax Filers

Islamabad:In light of the country’s economic challenges, the government had imposed hefty taxes on the property and real estate sector to boost tax revenue and included restrictions on non-filers buying property. However, it is now being reported that the government is considering tax relief for those investing up to 50 million PKR, even as the overall taxation on property transactions remains stringent.

Sources reveal that the government has formed a sub-committee to review the property tax situation. The committee’s proposals will determine whether non-filers will receive any relief in purchasing property, and what value of property filers will be permitted to acquire. The government’s new tax regulations had previously suggested that individuals declaring assets worth up to one crore PKR would not be allowed to purchase property valued above 1.3 crore PKR.

In a recent statement, Federal Board of Revenue (FBR) Chairman Rashid Langrial also emphasized that individuals looking to invest in the property sector must disclose their sources of income.

Economic expert Mehtab Haider, speaking to *Qudrat Roznama*, explained that while non-filers may not receive substantial relief under the new tax laws, the government is tightening the net around filers as well. He noted that the sub-committee tasked with reviewing tax amendments has yet to present concrete proposals. One suggestion that had been put forward was that individuals declaring assets worth one crore PKR should be restricted from purchasing property exceeding 1.3 crore PKR.

Haider also highlighted that there are currently three methods of property valuation in Pakistan: the DC rate, FBR evaluation, and market rate, and there is a significant discrepancy among them. In most cases (around 97%), property values are declared as under one crore PKR, meaning the new tax laws will only impact a small percentage of the population.

The idea of offering tax relief to those investing up to 50 million PKR was discussed in a parliamentary committee, which included members from the National Assembly, FBR Chairman, and real estate professionals. Chairman of the Habib Group, Arif Habib, suggested that individuals making investments of up to 50 million PKR annually should be exempt from scrutiny by the FBR. He argued that this would encourage more people to register as tax filers, after which tax rates could be adjusted upwards.

Chairman of the Association of Builders and Developers (ABAD) Hassan Bakhshi also pointed out that the new tax amendments would impact not just 2.5% of people, but potentially 60% of the population. He stressed that there was no longer black money flowing into the real estate sector, as transactions are now conducted through banking channels.

FBR Chairman Nauman Rashid Langrial shared statistics indicating that 93% of real estate transactions last year involved properties worth less than 5 million PKR, while only 3.8% involved transactions under one crore PKR. He further noted that there are only 12 individuals in the country who have declared assets worth over 10 billion PKR.

Langrial assured that efforts are underway to reduce transaction taxes for property purchases. However, he emphasized that investments made from untaxed income should not be allowed in the real estate market.

The evolving discussions indicate that while the government is aiming to boost the tax net and streamline property investments, they are also taking steps to prevent the misuse of the sector for unaccounted wealth.