Budget 2026-27 May Cut Property Taxes For Filers To Boost Real Estate Sector
- Government is considering major tax cuts on property purchases and sales for tax filers.
- Withholding tax on property purchases may be reduced from 1.5% to 0.25%.
- No tax relief is expected for non-filers under the proposed budget measures.
The federal government is considering significant tax relief for the real estate sector in the upcoming Budget 2026-27, with proposals aimed at reducing the tax burden on property buyers and sellers who are registered tax filers.
According to official sources, the proposed measures are part of broader efforts to stimulate activity in the property market and encourage documentation of the economy. The government is reviewing several tax adjustments that could make property transactions more attractive for compliant taxpayers.
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One of the key proposals under consideration is a substantial reduction in withholding tax on property purchases. Sources said the tax imposed under Section 236K may be lowered from the current 1.5 percent to just 0.25 percent for filers. The move is intended to provide direct relief to individuals investing in real estate and facilitate greater market activity.
Similarly, the government is also considering a reduction in withholding tax on property sales under Section 236C. The existing rate of 4.5 percent could be cut to 1.5 percent, significantly lowering transaction costs for sellers.
Officials familiar with the discussions said the proposed changes have been shared with the International Monetary Fund (IMF) as part of ongoing consultations regarding tax reforms and fiscal policy measures.
While relief is being considered for tax filers, sources indicated that non-filers are unlikely to benefit from the proposed changes. Current tax rates applicable to non-filers on property purchases and sales are expected to remain unchanged. At present, non-filers face a cumulative tax burden of around 10.5 percent on property transactions.
Government officials noted that withholding tax collections from July to March of the current fiscal year recorded a 29 percent increase compared to the same period last year. However, revenue generated through gain tax declined during the period, which officials believe may be linked to the impact of higher taxation on property transactions and reduced market activity.
The proposed tax reductions are expected to be finalized during the preparation of the federal budget for the fiscal year 2026-27. If approved, the measures could provide a major boost to Pakistan’s real estate sector by lowering transaction costs and encouraging greater participation from documented taxpayers.
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