Sources have informed ProPakistani that the International Monetary Fund (IMF) has agreed with the federal government on reducing taxes for Pakistan’s real estate sector.
The development marks a shift from earlier discussions, when the IMF had raised concerns over the proposed tax relief due to its possible impact on government revenue.
The government had been pushing for lower property transaction taxes as part of the Budget 2026-27 process. Officials believe the move can help revive the real estate and construction sectors, which have slowed down due to high transaction costs, rising construction expenses, and weak market activity.
Under the earlier proposal, the government wanted to reduce withholding tax on the purchase of immovable property for filers from 1.5 percent to 0.25 percent under Section 236K of the Income Tax Ordinance.
The government had also proposed reducing withholding tax on the sale of immovable property for filers from 4.5 percent to 1.5 percent under Section 236C.
Under the current FBR rates, Section 236K applies to buyers of immovable property. Filers currently pay 1.5 percent tax on properties with a fair market value of up to Rs. 50 million, 2 percent on properties above Rs. 50 million and up to Rs. 100 million, and 2.5 percent on properties above Rs. 100 million.
Late filers pay 4.5 percent, 5.5 percent, and 6.5 percent in the same three slabs. Non-filers pay much higher rates of 10.5 percent, 14.5 percent, and 18.5 percent.
Section 236C applies to sellers of immovable property. Under existing rates, filers pay 4.5 percent where the sale value does not exceed Rs. 50 million, 5 percent, where it is above Rs. 50 million and up to Rs. 100 million, and 5.5 percent where it exceeds Rs. 100 million.
Late filers pay 7.5 percent, 8.5 percent, and 9.5 percent in the same slabs. Non-filers pay 11.5 percent across all three slabs.
FBR rules state that these are advance income tax collections at the time of property transfer. Section 236C is collected from the seller, while Section 236K is collected from the buyer.
Capital gains tax remains separate. It is paid by the taxpayer while filing the income tax return, after adjusting any advance tax already paid under Section 236C.
The government believes lower taxes can increase property transactions, support construction activity, and help related industries such as cement, steel, paint, transport, and financial services.
Officials also believe the move can encourage overseas Pakistanis to invest more in Pakistan’s property market.
Final details of the relief are expected to become clear in the Budget 2026-27 documents, including whether the reduction will apply only to active filers or also cover late filers and non-filers.
In short. Real estate mafia doesn’t want to pay taxes. They want tax burden to be on consumers
It is an utter shame that IMF dictates us such things. Our cursed rulers all along have brought Pakistan on it’s knees and made it a slave of IMF