Real Estate Set to Surge as Government Plans to Scrap FED on Property Deals

The federal government is considering removing the Federal Excise Duty (FED) on the transfer of plots and commercial properties due to its minimal revenue generation in the first half of the 2024-25 fiscal year. The Federal Board of Revenue (FBR) is expected to propose the elimination of FED on commercial property transfers and the first transfer of open plots or residential units, with the potential implementation in the upcoming federal budget.

Additionally, the government is evaluating a reduction in transaction taxes on property sales and purchases to stimulate real estate activity. A task force on housing sector development has suggested abolishing Section 7E of the Income Tax Ordinance, removing Capital Value Tax (CVT) in Islamabad, and standardizing stamp tax rates across provinces. The task force also recommends waiving wealth reconciliation requirements for real estate investments up to Rs50 million.

While a key meeting to discuss these recommendations has been postponed twice due to the prime minister’s schedule, it is expected to take place this week. Real estate experts believe that these reforms could significantly reduce construction and transfer costs, encouraging investment and revitalizing market activity.