Islamabad: The Federal Board of Revenue (FBR) has reported a 24.3% increase in withholding tax (WHT) collections from the property sector during the first nine months of the current fiscal year. The FBR collected PKR169 billion on account of WHT from the sale and purchase of immovable property, compared to PKR136 billion during the same period last year.
Despite a 15% dip in property transactions, largely attributed to the surge in tax rates, the total WHT collection from property dealings exceeded expectations. The FBR had initially targeted a 50% increase in tax revenue, but the tax amount rose by 24% instead.
The government had significantly raised WHT rates in the last fiscal year, with the rate on property sales now at 3% for filers and 6% for non-filers, up from 2% and 4%, respectively. Similarly, the advance tax on property purchases was increased to 3% for filers and 10.5% for non-filers.
Meanwhile, the government is considering abolishing the Federal Excise Duty (FED) on property transactions, as its contribution to national revenue has been less than PKR 2 billion in the first nine months of the fiscal year. Sources indicated that a summary to this effect has been presented to the federal cabinet, though it has not yet been approved. The proposed change will likely be discussed in parliament soon.
In contrast, the salaried class has contributed approximately PKR 370 billion in taxes during the same period, surpassing the property sector and exporters in terms of tax contributions.
Despite higher tax rates, the property sector remains a significant source of revenue for the government, though future reforms, including potential FED removal, will continue to shape its financial contributions.
Samra Zulfiqar, a real estate analyst at Zameen.com, is passionate about finding projects that offer buyers the best returns. Her keen insights spotlight the market’s most promising opportunities.
