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.
