Government Task Force Proposes Tax Relief for Real Estate

Islamabad: In a bid to revive Pakistan’s struggling real estate sector, the Task Force for Housing Sector Development has recommended eliminating Section 7E of the Income Tax Ordinance and abolishing the Capital Value Tax (CVT). These reforms aim to reduce high property transaction costs and attract both local and overseas investment.

Key Tax Reforms Proposed

The task force has outlined several major tax reforms to stimulate property transactions and boost economic activity:

• Abolition of Section 7E & CVT to facilitate hassle-free property transactions.

• Reduction of transaction taxes (currently 12-13%) to prevent capital outflow.

• Removal of 7E declaration & commissioner approval for faster processing.

• Exemptions for properties valued up to Rs 10 million to encourage small-scale investments.

• Uniform tax rates for filers and late filers to create a fairer system.

• Online verification via NADRA for non-resident investors.

• Property valuation updates every three years to align with market trends.

• Tax exemptions for low-cost housing, government plots, and first-time homebuyers.

Short-Term Measures to Revive the Real Estate Market

To further boost investment and promote affordability, the task force has suggested additional short-term measures, including:

• Lowering policy rates to a single digit to make housing more accessible.

• Reviving the “Mera Pakistan Mera Ghar” (MPMG) Scheme to support housing finance.

• Reintroducing mark-up subsidies on low-cost housing loans.

• Digitizing building and housing approvals to increase transparency and efficiency.

• Encouraging vertical developments to optimize urban land usage.

• Defining low- and middle-income housing for better-targeted support.

Impact of Tax Reforms on Real Estate & Economy

Industry experts have raised concerns that property transactions have declined by over 50% due to excessive taxation, pushing many buyers to use power of attorney to bypass taxes. The Task Force emphasizes that reducing tax burdens and streamlining policies will revive construction and real estate, attract fresh investment, create employment opportunities, and contribute to economic stability.

With the upcoming federal budget, collaboration between the federal and provincial governments will be crucial to successfully implementing these reforms. If executed effectively, these tax reforms could revitalize Pakistan’s real estate market and restore investor confidence.