Source: Graana.com
Islamabad, December 19, 2024 – The Association of Builders and Developers of Pakistan (ABAD) has called for the removal of the 3% Federal Excise Duty (FED) on the real estate sector, urging the government to revise the policy.
In a proposal to the Prime Minister, ABAD also recommended a 1% withholding tax on property transactions under Section 236K and tax exemptions for first-time homebuyers. These measures aim to address the country’s 12 million-unit housing shortage and boost the sector’s growth.
ABAD further proposed tax-free property purchases for overseas Pakistanis to attract foreign investment. The organization highlighted the challenges faced by property buyers in obtaining refunds from the Federal Board of Revenue (FBR) and argued that the FED, typically used on goods like tobacco and alcohol, negatively impacts the real estate market.
Additionally, ABAD suggested introducing a 10-year fixed-rate mortgage linked to Pakistan Investment Bonds (PIBs), with a 15-20% down payment, to increase homeownership access. The association also called for stronger foreclosure laws to support mortgage financing and emphasized the need for banks to prioritize construction in financing.
ABAD expressed concern about capital outflow to markets like Dubai, where tax rates are lower, and urged a more balanced tax approach to retain investment in Pakistan’s real estate sector. It also stressed the importance of construction finance to stimulate the economy, noting that the sector supports 72 related industries.
The association commended the Prime Minister for his efforts to strengthen Pakistan’s economy and urged swift action on these proposals to foster sustainable growth in the real estate sector.
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