In a major reform to boost urban housing and support middle-income buyers, the federal government has introduced a 30% tax credit on the purchase of flats and 10-marla houses as part of the 2024–25 budget. The announcement was made during a meeting of the National Assembly’s Standing Committee on Finance, chaired by MNA Naveed Qamar.
Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial briefed lawmakers that the move aims to incentivize vertical housing and make real estate more accessible to a broader segment of the population. The credit is expected to ease the financial burden on potential homeowners and promote legal property documentation.
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The government has also revamped the withholding tax (WHT) regime for property transactions. Purchase-side WHT has been reduced, with rates now set at 1.5% for properties up to Rs50 million, 2% for those between Rs50–100 million, and 2.5% for properties above Rs100 million. However, WHT on property sales has been increased to 4.5%, 5%, and 5.5% for the respective value brackets.
Additionally, a Rs30,000 penalty will be imposed on registered businesses that accept cash payments exceeding Rs200,000 for goods, in an effort to curb undocumented transactions. The IMF has reportedly raised concerns over the reduced WHT on purchases, citing possible revenue risks.
These reforms are part of the government’s broader strategy to formalize the real estate sector, promote affordable housing, and increase overall tax compliance.
