The federal government is reportedly moving toward significantly reducing taxes on property transactions, with proposals suggesting a 50 percent cut in taxes applied to the sale and purchase of immovable properties.
According to sources, the proposed relief is part of ongoing discussions for the upcoming Budget 2026–27, aimed at lowering the cost of property dealings and reviving activity in the real estate sector, which has slowed due to high taxation and strict compliance measures.
Under the proposed changes, withholding taxes on both buyers and sellers of property could be reduced substantially. Currently, buyers pay advance tax under Section 236K, while sellers are subject to tax under Section 236C of the Income Tax Ordinance. The government is now considering slashing these rates by half for tax filers.
Officials say the move is designed to stimulate property market transactions, encourage documentation of real estate assets, and attract both domestic and overseas investment. However, the proposal is still under review and has not yet been finalized.
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Sources further indicate that the government is also in consultation with international financial institutions, including the IMF, which has expressed concerns over revenue losses if property tax rates are reduced too sharply.
Despite this, policymakers argue that lower transaction taxes could increase overall market activity, which may help offset revenue reductions through higher transaction volumes and improved compliance.
The final decision on the tax cuts is expected to be announced in the federal budget after approval from the cabinet and completion of negotiations with relevant stakeholders.
