All posts by : Taz Group

Everyone expected that Budget 2026 would bring some relief for builders and developers because the real estate sector has been asking for help loudly and consistently. But what the government actually announced surprised many. Some people are calling the budget confusing and not strong enough to fix the real problems in real estate. Here’s what happened, buyers now have to pay lower withholding tax (WHT); that’s a tax you pay when you buy a property. On the other hand, sellers will now pay higher capital gains tax (CGT); that’s a tax on the profit you make when you sell a property. The Federal Excise Duty (FED); which was an extra tax on property transactions, has been completely removed. The government is also offering a tax benefit (called a tax credit) to people who build houses up to 10 marlas or apartments up to 2,000 square feet. But the most important and strict rule is this: people who don’t file taxes (non-filers) won’t be allowed to buy property or vehicles at all.

At first glance, it might look strange to reduce one tax and increase another, but there’s a plan behind it. The government wants to move from taxing every transaction to taxing only when people actually make money. WHT is the same for everyone, no matter how rich or poor, that’s why it’s called a “regressive” tax. So reducing it helps ordinary buyers. CGT is based on your profit, so the more you earn, the more you pay. That makes it a “progressive” tax. This discourages people from flipping properties quickly just to make a quick buck and increases the chances that buyers are actually looking for long term homes, not short term gains. Removing FED also helps by making the process less costly and more open.

But here’s the tricky part: blocking non-filers is a bold step. The real estate sector in Pakistan runs heavily on undocumented money, meaning money that hasn’t been declared to the government. If non-filers are truly banned from buying property, the number of buyers might drop fast. This could slow down the market or even cause people to move their money abroad. But, if the rule stays in place, it could finally clear out fake demand and allow real, honest business to grow.

In short, the mix of tax cuts for buyers, increased tax on sellers’ profits, benefits for home builders, and strict rules for non-filers shows the government is trying to push real estate toward transparency. But it all depends on whether the government stays strong under pressure. Real estate lobbyists are already asking for these new rules to be reversed. So, if the Prime Minister really wants to clean up the economy and make things fairer, now’s the time to prove it, even if some investors threaten to leave.

The federal government of Pakistan has unveiled significant tax reforms in the real estate sector as part of the Federal Budget for the fiscal year 2024 – 25. These measures are aimed at promoting affordable housing, encouraging real estate documentation, and stimulating economic activity, especially in the urban housing market.

1. Introduction of Tax Credit for Home Buyers

A major highlight of the budget is the introduction of a 30% tax credit on the purchase of:

• Flats (apartments)
• 10 marla houses (approximately 250 square yards)

This initiative is primarily aimed at middle income groups and first time home buyers who are looking to invest in vertical housing solutions. The government is encouraging vertical growth to optimize land use in urban areas, reduce housing shortages, and make home ownership more accessible.

2. Revised Withholding Tax (WHT) Structure for Property Purchases

To further incentivize property buyers, the government has revised and significantly reduced the withholding tax on property purchases:

• Properties valued up to Rs 50 million: 1.5% WHT
• Properties between Rs 50 million and Rs 100 million: 2% WHT
• Properties exceeding Rs 100 million: 2.5% WHT

This reduction aims to ease the financial burden on buyers and encourage more documented property transactions.

3. Increased Withholding Tax on Property Sales

Conversely, the government has increased the WHT rates on property sales to ensure steady revenue collection:

• Properties sold up to Rs 50 million: 4.5% WHT
• Properties sold between Rs 50 million and Rs 100 million: 5% WHT
• Properties sold above Rs 100 million: 5.5% WHT

These rates apply at the time of sale and are aimed at improving revenue transparency while discouraging speculative property trading.

4. Abolition of Federal Excise Duty (FED) on Property Transactions

In a welcome move for buyers and sellers, the government has completely abolished the Federal Excise Duty (FED) on property transactions. This measure further reduces the transactional cost of buying and selling properties.

5. Penalty for Large Cash Transactions

To promote financial transparency and discourage undocumented cash transactions, a penalty of Rs 30,000 will be imposed on registered businesses accepting cash payments exceeding Rs 200,000 for the sale of goods.

Rationale Behind the Tax Reforms

The real estate sector has historically been a significant contributor to Pakistan’s economy but has remained largely undocumented, resulting in loss of revenue and market distortions. The new reforms are designed to:

• Promote urban vertical housing to meet growing population demands.
• Encourage documentation of property transactions.
• Provide financial relief to middle income home buyers.
• Maintain a balance between revenue generation and market growth.

However, it is important to note that while the government has introduced these reductions, international financial institutions like the International Monetary Fund (IMF) have expressed concerns over the reduced tax rates, viewing them as potential risks to revenue collection. The government, however, remains committed to fostering economic growth while gradually improving tax compliance.

Understanding Fiscal Reforms and Compliance

The term fiscal reforms refers to changes in government policies regarding taxation and public spending. These reforms aim to create a balanced budget, improve economic stability, and ensure sustainable growth. Through these real estate tax reforms, the government seeks to:

Improve tax compliance, generate long term, sustainable revenue, and facilitate affordable housing solutions.

Tax Calculation Simplified

To help buyers and sellers better understand the financial impact, here are some simplified examples:

For Property Purchase:

• Property Value: Rs40 million
• Applicable WHT: 1.5%
• Tax Payable: Rs 40,000,000 x 1.5% = Rs 600,000

For Property Sale:

• Property Sale Price: Rs 60 million
• Applicable WHT: 5%
• Tax Payable: Rs 60,000,000 x 5% = Rs 3,000,000

For Tax Credit (Applicable on Flats and 10 Marla Houses):

• Total Tax Liability: Rs1,000,000
• Tax Credit: 30% of Rs1,000,000 = Rs 300,000
• Final Tax Payable: Rs1,000,000 – Rs 300,000 = Rs 700,000

Applicability for Filers and Non-Filers

At present, these rates primarily apply to tax filers. Historically, non-filers have been subjected to higher tax rates, often double those of filers. The government is expected to release detailed guidelines clarifying the exact applicability for non-filers soon.

For individuals and businesses involved in real estate, filing your tax returns and becoming an active taxpayer remains highly advisable to benefit from reduced rates and avoid higher withholding tax obligations.

The Role of Taz Group in Real Estate Taxation

Handling the complexities of real estate taxation can be challenging, especially with frequent regulatory changes. Taz Group, as a trusted real estate advisory and consultancy firm, is here to guide you. Our expert team stays updated on all government policies, taxation reforms, and compliance requirements to provide you with:

• Comprehensive tax advisory services
• Real estate investment guidance
• Assistance with property documentation and compliance
• Professional support for both individual and commercial clients

Contact Taz Group Today

Whether you’re a first time buyer, seasoned investor, or a business looking to optimize your property portfolio, Taz Group is your reliable partner in navigating Pakistan’s evolving real estate landscape.

Get in touch with us today to schedule a consultation and ensure your real estate transactions are fully compliant, financially optimized, and strategically sound.

The real estate market of Islamabad is getting a much-needed boost. In a major step, the federal government of Pakistan has decided to reduce the stamp duty on immovable property in Islamabad Capital Territory (ICT) from 4% to 1% for tax filers, and to 2% for non-filers. This change has been included in the Finance Bill 2025, which is expected to be passed by the parliament on June 26, 2025.

This decision has raised several questions, why was this tax so high in the first place? Why is it being reduced now? And what does it mean for property buyers, sellers, and the overall real estate market? Let’s break it all down in simple words.

What Is Stamp Duty?

Stamp duty is a government tax that buyers pay when they purchase property. It is calculated as a percentage of the property’s value and must be paid to register the property in the buyer’s name.

In Islamabad, this duty was 4% for the past several years. That means if someone bought property worth PKR 10 million, they had to pay PKR 400,000 as stamp duty just for the paperwork.

Also read: How Much You’ll Really Save on Property Deals After FED TAX Removal

Why Was Stamp Duty 4% Before?

Initially, the higher stamp duty was a way for the government to collect revenue. Property transactions are a major source of income for the government, especially in developing countries where property sales are frequent.

Another reason for high stamp duty was to discourage speculative buying, when investors keep buying and selling property just to make profit (also called “flipping”), which can drive property prices too high for ordinary buyers. The high stamp duty was supposed to slow down this trend and keep property prices stable.

Why Reduce It Now?

The problem is, instead of only discouraging speculators, the high taxes discouraged almost everyone.

In the last four years, Islamabad saw a sharp drop in property transactions. According to data:

• 2021: 40,890 transfer deeds (26,629 kanals)
  
• 2022: 36,200 transfer deeds (26,305 kanals)
  
• 2023: 26,669 transfer deeds (13,532 kanals)
  
• 2024: Only 20,726 transfer deeds (9,912 kanals)
  

This steady decline shows that fewer people were buying and selling property. The government realized that the high taxes were becoming a burden, stopping people from investing or buying homes.

A slowdown in property transactions also hurts many sectors connected to real estate, like construction, labor, banks, lawyers, brokers, and material suppliers.

To revive the market, the government decided to reduce the stamp duty drastically.

What Is the New Stamp Duty Rate?

Under the new Finance Bill 2025:

• For Filers (those who submit tax returns):
  Stamp duty will now be 1% of the property value.
  
• For Non-Filers (those who don’t submit tax returns):
  Stamp duty will be 2% of the property value.
  

There are also discussions that the government may soon remove the 1% registration fee as well, giving even more relief to buyers.

What Were the Other Taxes on Property?

Before this reduction, buyers were paying a heavy total tax burden. For example:

• Small residential plots: around 11% total taxes for filers.
  
• Commercial property: around 14% total taxes for filers.
  
• Non-filers: around 20% total taxes.
  

These multiple taxes made property buying very expensive.

Benefits of Tax Reduction

• With lower stamp duty, buyers now need less upfront cash to complete their purchase. This makes it easier for middle class families and first time buyers to own property.
• When transaction costs go down, people feel encouraged to buy, sell, or invest in property. This can lead to a revival of the property market and higher sales volumes.
• Real estate is connected to many industries: construction, cement, steel, banking, brokerage, and more. When the property market grows, these industries benefit, creating more jobs and economic activity.
• By offering lower rates to filers, the government encourages more people to file tax returns. This increases the number of people in the tax system, improving overall tax collection in the long term.

Benefits of Being a Filer vs. Non-Filer

Being a filer not only reduces your taxes but also makes property transactions smoother. The government strongly encourages citizens to become filers to enjoy these benefits.

Are There Any Disadvantages?

While the tax reduction has many benefits, there are also a few possible downsides:

• The government may collect less revenue in the short term due to lower stamp duty.
  
• If unchecked, lower taxes could bring back speculative investors who buy and sell property quickly for profit, causing property prices to rise again.
  
• Ensuring proper property valuation is key. Some people may try to undervalue properties to pay less stamp duty.
  

However, these risks can be managed with better regulation and stricter property valuation processes.

The government’s decision to reduce stamp duty is a welcome step for Islamabad’s property market. It makes property buying more affordable, boosts market activity, and encourages more people to become tax filers.

While there are some risks, overall this move is likely to have a positive impact on the economy, real estate sector, and buyers who have been waiting for some relief.

The real estate market had been struggling due to high taxes, and this much needed correction may finally bring back confidence among buyers and investors.

In a landmark decision announced through the Budget 2024 – 25 of Pakistan, the federal government has officially abolished the Federal Excise Duty (FED) on the purchase and transfer of property. Effective from July 1, 2024, buyers of residential and commercial property will no longer have to pay the previously applicable 3 – 7% FED. This move, as confirmed by the Federal Board of Revenue (FBR), is expected to significantly reshape the real estate landscape across the country.

What Has Changed?

Prior to this amendment, anyone purchasing or transferring property in Pakistan was required to pay Federal Excise Duty, ranging between 3% and 7%, depending on the property type and transaction value. With the abolition of FED:

• FED on allotment and transfer of residential and commercial plots has been completely withdrawn.
  
• Buyers and investors will now experience a substantial reduction in transaction costs.
  
• The removal of FED aims to stimulate property transactions, encourage legal documentation, and promote investment in the real estate sector.
  

“Federal excise duty on the allotment and transfer of residential and commercial plots, imposed through the Finance Act, 2024, is now proposed to be withdrawn,” FBR Statement

Also read: Budget 2025 – 26 Faces Challenges but Offers Tax Relief to Revive Pakistan Real Estate Sector

Adjustments in Other Property Taxes

While FED has been abolished, certain other property-related taxes have been slightly modified under the Finance Act 2024-25:

Tax on Sale of Property

• For active filers, the tax rate has been reduced from 3% to 1.5%.
  
• For late filers and non-filers, the tax rates remain unchanged at 6% and 12%, respectively.
  

Tax on Purchase of Property

• For active filers, the tax rate remains steady at 3%.
  
• For late filers and non-filers, the rates continue at 6% and 12%, respectively.
  

The Impact on Real Estate Market

The abolition of FED is being widely welcomed across the real estate sector, which has long been burdened by high transactional costs, multiple layers of taxation, and regulatory complexities. Here’s a closer look at its expected impact:

1. Lower Transaction Costs

By eliminating the FED component, the overall cost of property transactions drops considerably. This directly benefits:

• First time home buyers
  
• Middle class families
  
• Real estate investors
  
• Developers acquiring land for projects
  

2. Boost in Real Estate Investment

With transaction costs lowered, many potential investors who were previously reluctant to enter the market due to high taxes may now reconsider. The real estate market in Pakistan could witness a surge in:

• Residential housing demand
  
• Commercial real estate investments
  
• Construction sector growth
  
• Ancillary industries like cement, steel, and interior design
  

3. The removal of FED might also encourage greater transparency and formalization in the property market, as buyers and sellers have less incentive to undervalue properties to reduce tax liabilities.

4. While the government may lose immediate revenue from FED collection, it expects to compensate through increased transaction volumes, leading to higher collections of other taxes such as Capital Gains Tax, withholding taxes, and registration fees.

Impact on Property Buyers and Investors

For property buyers, especially middle income groups, the financial burden of acquiring property has been eased. The abolition of FED means:

• More affordable property purchases
  
• Higher purchasing power for buyers
  
• Encouragement for individuals previously priced out of the market
  

For investors and developers:

• Improved feasibility for large scale projects
  
• Potential for faster project sales due to better affordability for buyers
  
• Increased liquidity in the real estate sector
  

What It Means for Non-Filers and Late Filers

While the FED abolition benefits everyone, non-filers and late filers will continue to face higher property transaction taxes:

• Non-filers pay 12% tax on both purchase and sale of property.
  
• Late filers pay 6% tax.
  
• The government continues to discourage non-compliance and incentivize tax return filing through this structure.
  

The Broader Economic Context

The government’s decision is part of a broader effort to stimulate economic activity, attract foreign investment, and boost the construction and real estate sectors, which are key drivers of employment and GDP growth in Pakistan.

With this move, the government hopes to:

• Revitalize the housing sector
  
• Support allied industries
  
• Create job opportunities
  
• Strengthen economic growth amid global challenges
  

With the removal of the Federal Excise Duty (FED), buyers can now save anywhere from 3% to 7% of the property value, a significant reduction in upfront costs. For example, on a property worth PKR 10 million, the FED would previously have added between PKR 300,000 to PKR 700,000 to the transaction. Now, that entire amount stays in the buyer’s pocket. This directly increases purchasing power, allows buyers to afford better properties or invest in additional upgrades, and removes one of the major financial barriers that discouraged many from entering the property market in the first place.

If you are someone who stands to benefit from this major tax relief; whether you’re a first time homebuyer, seasoned investor, or developer planning your next big project; Taz Group is here to guide you. With in-depth market knowledge, legal expertise, and personalized investment advisory, Taz Group can help you make the most of these new tax changes. From property selection to legal compliance and financial planning, our team ensures you explore Pakistan’s evolving real estate landscape with confidence.
Contact Taz Group today to schedule your free consultation and start capitalizing on these unprecedented savings opportunities.

The Rawalpindi Development Authority (RDA) has proposed a major Annual Development Plan (ADP) worth nearly PKR 8 billion for the fiscal year 2025 – 26. This plan outlines a series of large scale infrastructure and urban improvement projects aimed at transforming Rawalpindi into a more connected, accessible, and modern city. The proposal is currently awaiting approval from the Punjab government.

At the heart of this plan are a number of key road and transportation initiatives, many of which were recommended by elected members of the national and provincial assemblies. These efforts fall under two major umbrellas, the Urban Development Package and the City Development Package.

Among the most significant proposals are the construction of three new underpasses at Chandni Chowk, Rawal Road on Murree Road, and Marrir Chowk. A new flyover is also in the works to connect Siddiqui Chowk to IJP Road, aiming to reduce traffic bottlenecks in these high-traffic areas.

One of the largest projects is the dualisation of Adiala Road, from Khasala Khurd to Gorakhpur, with a budget allocation of PKR 2.539 billion. This will help manage the increasing traffic flow on this busy corridor. Additional road improvement projects include:

• Upgrades to Girja Road to Akbar Chowk (PKR 603.32 million)
  
• Work on Chakri Link and Talsa Road (PKR 1.298 billion)
  
• Enhancements on High Court Road and nearby areas (PKR 423.24 million)
  

As part of the City Development Package, a multi storey parking plaza is proposed for Liaquat Bagh, which is expected to cost PKR 2.533 billion. Another major project is an underpass on Stadium Road, which will connect Ninth Avenue to IJP Road, estimated at PKR 770.32 million.

The plan also includes several targeted infrastructure upgrades to improve overall city connectivity and ease of movement:

• Rehabilitation of the western alternate route from Chandni Chowk to Holy Family Hospital (PKR 335.04 million)
  
• Road improvement from Hotel Flashman to Faizabad on Murree Road (PKR 953.25 million)
  
• Development in areas such as Dhoke Khabba, Hameed Khan Road, and Sher Power Colony (PKR 998 million)
  

In addition to major infrastructure changes, the plan also includes several community focused developments:

• A pedestrian bridge near Benazir Bhutto General Hospital (PKR 66.43 million)
  
• A service road from the Old Airport to Flying Club Road (PKR 224.23 million)
  
• New road construction in Ghazni Colony, Dosera Ground, and the Syedpur Scheme (PKR 247.27 million)
  

This comprehensive development plan is designed to reduce traffic congestion, enhance connectivity, and upgrade the city’s urban landscape in response to Rawalpindi’s growing population and infrastructure needs. Once approved and implemented, these projects have the potential to make daily commutes smoother, improve public safety, and foster better urban living for residents across the city.

TAZ Group will continue to monitor developments and share updates as the Punjab government moves toward finalizing this historic investment in Rawalpindi’s future.

As Pakistan prepares to unveil its Budget for the fiscal year 2025-26, major reforms are being proposed that could transform the real estate and construction sectors, while significantly boosting economic activity through a massive development budget.

Tax Reforms to Revive the Real Estate Market

In a bid to ease the tax burden and rejuvenate the real estate industry, an influential economic policy think tank has proposed substantial tax cuts on property transactions. Currently, taxes on buying and selling property in Pakistan can reach as high as 11%, deterring both investors and genuine buyers.

For the upcoming budget, proposals recommend:

• Reducing transaction taxes to 2-2.5%
  
• Cutting property sale taxes to 1.5-2%
  
• Eliminating property purchase taxes entirely
  

These suggestions aim to stimulate real estate investment, encourage formal documentation of property deals, and curb capital flight by keeping investments within the country.

Support for Construction Sector

To further accelerate the sector’s growth, the proposals include:

• Removing sales tax on construction services
  
• Simplifying Section 7E related to deemed rental income from property
  
• Restoring Section 9A under the second schedule for investor relief
  
• Activating the Pakistan Real Estate Regulatory Authority (PRERA) for more structured governance and investor confidence
  

These strategic recommendations aim to create jobs, boost housing development, and make construction more affordable and transparent across Pakistan.

Over Rs 1 Trillion for Economic Uplift

The federal government has also proposed an ambitious development budget of Rs1 trillion to power Pakistan’s infrastructure and public service sectors. This plan will be discussed in the Annual Plan Coordination Committee (APCC) meeting scheduled for June 2, 2025.

Here’s a look at the key allocations under the Public Sector Development Programme (PSDP):

These figures represent only a partial breakdown, the remaining budget will go toward provincial programs and other national initiatives.

These budget reforms represent a strategic shift toward growth focused policymaking. By lowering taxes and increasing development spending:

• Real estate investors may find more profitable and transparent opportunities
  
• Construction companies could see improved margins and more project pipelines
  
• Homebuyers may benefit from reduced transaction costs and increased housing supply
  
• The national economy stands to gain from more domestic investment, job creation, and infrastructure expansion
  

As Pakistan continues to urbanize and seek foreign and domestic investment, these changes are expected to create momentum in the property market, attract capital back into the economy, and drive inclusive development.

The federal government has officially launched a strict operation targeting illegal constructions and unauthorized housing societies across Islamabad. This initiative, led by Interior Minister Mohsin Naqvi, comes after a high-level meeting with top administrative and police officials. The decision signals a renewed focus on urban management, city planning, and law enforcement in the capital. Minister Naqvi issued firm directions for immediate and uncompromising action against anyone violating building regulations. He stressed the importance of a zero tolerance approach and ordered relevant authorities to ensure that no unauthorized construction project goes unchecked.

One of the key tools the government will be using is satellite mapping technology through the Land Information and Management System (LIMS). This system allows for precise tracking of land use and can help prevent future violations before they escalate. It also reflects a shift toward more data driven and transparent governance. Illegal construction has been a growing problem in Islamabad, often driven by rapid population growth, rising housing demand, and inconsistent enforcement in the past. The government now appears committed to reversing that trend by combining technology with policy and strict administrative action.

For organizations like Taz Group, which operate in the real estate and development sector, this development is highly relevant. It highlights the critical need for regulatory compliance, transparent planning, and ethical business practices in construction and urban development. At Taz Group, we believe that long term value is built not just with bricks and concrete, but also with trust and responsibility. As we continue to invest in planned and sustainable communities, we view this CDA crackdown as a positive step toward restoring order and professionalism in the real estate sector. It sets the tone for how future urban expansion in Islamabad; and across Pakistan; should be managed.

In addition to targeting illegal buildings, the Interior Minister also instructed city administrators to take steps that will directly improve the lives of residents. These include maintaining cleanliness in public areas, ensuring the availability of essential commodities at stable prices, and preparing the city for the upcoming Eid Ul Azha. These efforts are part of a broader plan to make Islamabad not just a better governed city, but also a cleaner, safer, and more inclusive place for its residents.

DigiEstate, recognized as Pakistan’s first Shariah compliant fintech and proptech startup, has officially clarified that it has not submitted any application to the Pakistan Stock Exchange (PSX) for the listing or trading of its Real Estate Security Tokens (RESTs).

According to DigiEstate, recent communication with PSX was merely exploratory in nature, aimed at understanding the potential for future collaboration or trading mechanisms involving RESTs. Unfortunately, this conversation was misinterpreted by some as a formal application for listing RESTs on PSX, which the company firmly denies.

The company stated:

“We would like to emphasize that under current regulatory frameworks, listing or trading of RESTs through PSX is not permitted. No formal application has been made, and no regulatory approval has been sought for listing RESTs.”

Furthermore, DigiEstate clarified that it is currently operating within the SECP’s Regulatory Sandbox, a government approved environment designed to test innovative business models under close supervision. The company has not been granted permission to scale up its operations or raise funds from the general public at this stage.

In its official statement, DigiEstate added:

“We sincerely regret any unintentional misrepresentation of our current regulatory status. Our focus remains on responsibly navigating the SECP Sandbox process. We are committed to maintaining transparency and ensuring all future communications remain fully aligned with regulatory guidelines.”

What This Means for Taz Group Clients and Partners:

For our clients, investors, and stakeholders at Taz Group, this development highlights an important distinction between emerging concepts in the real estate sector and regulated, actionable investment opportunities.

DigiEstate is working on an innovative idea to allow individuals to invest in fractional property ownership through digital tokens, essentially making it possible to invest in real estate without purchasing an entire property. However, this model is still under testing and regulatory review. It is neither open to the public nor legally authorized for listing or trading in Pakistan at this point. We advise all clients to exercise caution when approached with investment opportunities involving digital real estate tokens and to consult with licensed experts or agencies like Taz Group for any such engagements.