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 sectorโs 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 Pakistanโs infrastructure and public service sectors. This plan will be discussed in the Annual Plan Coordination Committee (APCC) meeting scheduled for June 2, 2025.
Hereโs a look at the key allocations under the Public Sector Development Programme (PSDP):
| Sector / Department | Proposed Allocation |
| National Highway Authority (NHA) | Rs 170 billion |
| Water Resources Projects | Rs140 billion |
| Power Division | Rs105 billion |
| Higher Education | Rs50 billion |
| National Food Security Projects | Rs4 billion |
| Ministry of Information & Broadcasting | Rs3 billion |
| Industry & Production Sectors | Rs3 billion |
| Maritime Affairs | Rs3.5 billion |
| Inter-Provincial Connectivity Projects | Rs1.5 billion |
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.
