Task Force Recommends Policy Changes to Stimulate Growth in Real Estate and Construction Sectors

The government has finalized a comprehensive set of proposals aimed at reviving Pakistan’s real estate and construction sectors. These initiatives are designed to stimulate investment and create employment opportunities, thereby giving a significant boost to the economy. Developed by a specialized task force, the recommendations have been submitted to the Federal Board of Revenue (FBR) for review. The measures are in line with the Prime Minister’s vision of strengthening the property market to drive economic growth.

Key Recommendations for Reviving Pakistan’s Real Estate and Construction Sectors:

1. Non-Filers Allowed to Buy Property Worth Up to Rs10 Million

In a significant change, non-filers—individuals who don’t file tax returns—will now be allowed to purchase property up to Rs10 million. This measure aims to make the real estate market more accessible to a wider group of potential buyers, including those previously excluded due to tax filing requirements.

• Tax Reductions on Property Transactions

To make real estate transactions more affordable, several tax cuts are proposed:

• Capital gains tax on property sales would be reduced from 3% to 1.5% for certain transactions, and from 4% to 2% for others.
• The tax on property purchases would drop from 3% to 0.5%.

These reductions will lower the overall tax burden on property deals, which currently ranges from 11% to 14%.

• Lowering Overall Tax Burden

The government is proposing to lower the total tax burden on property transactions to 4% to 4.5%, a substantial reduction from the current rates. This is expected to make buying and selling property more attractive and less costly.

• Overseas Pakistanis Given Easier Access to Property Investments

The proposal includes measures to make it easier for overseas Pakistanis to invest in the real estate market. NADRA will provide an online registration facility, allowing overseas investors to register and purchase property more easily from abroad.

• Filers Allowed to Declare Property Worth Up to Rs50 Million

For tax filers, the new recommendations propose allowing them to declare property valued up to Rs50 million in their wealth statements, which will help ensure greater transparency in property transactions.

• Regulation of Land Use to Tackle Illegal Housing Societies

The Punjab government has also proposed the establishment of a Special Planning Authority to regulate land use and curb the proliferation of illegal housing societies across the province. This will help ensure that property developments are properly planned and comply with legal regulations.

These reforms aim to make the real estate market more appealing to both local and foreign investors, ultimately driving substantial growth in the sector. The government is optimistic that these recommendations will foster a favorable investment environment, stimulate economic activity, and generate numerous job opportunities as the real estate and construction sectors regain momentum.