ISLAMABAD: The upcoming Budget 2026-27 is expected to include potential relief measures for the real estate sector as the government intensifies efforts to boost construction activity and expand employment opportunities, according to official sources.
Sources said proposals under consideration include reductions in transaction taxes on property deals, aimed at reviving market activity and increasing overall tax collection through higher volumes. Officials have reportedly briefed the International Monetary Fund on possible adjustments to the taxation structure.
Under the proposed changes for Budget 2026-27, withholding tax under Section 236K on property purchases may be reduced from 1.5 percent to 0.25 percent, while Section 236C on property sales could be lowered from 4.5 percent to 1.5 percent. Authorities believe that easing transaction costs could stimulate buying and selling activity in the real estate market.
Sources further indicated that the Federal Board of Revenue has already reduced property valuation rates by 30 to 35 percent over the past three months, as part of broader efforts to align market values.
However, no relief is expected for non-filers, who may continue to face a 10.5 percent tax on property transactions. Officials maintain that higher taxation on non-compliant segments remains a key policy stance.
According to sources, elevated tax rates have already impacted activity, with a reported 29 percent decline in withholding tax collections under Section 236K between July and March compared to the previous year. Similarly, capital gains tax collections under Sections 37A and 37 have dropped significantly due to reduced transaction volumes.
Experts from the Real Estate Consultants Association (RECA) have welcomed the possibility of reforms in Budget 2026-27, stating that growth in the construction and property sectors supports over 45 allied industries and could help reduce unemployment.
They added that strengthening real estate activity remains essential for achieving broader economic growth targets and stimulating industrial expansion.
