ISLAMABAD (Kashmir English): To revive the real estate and property sector and promote economic activity, the government has introduced several incentives in the federal budget for the upcoming Fiscal Year 2025-26.
As per details, the reductions are likely to make property purchases more affordable for buyers and stimulate demand in the real estate market.
Finance Minister said the government has proposed decreasing the standard withholding tax on property transactions. The government proposed a reduction in withholding tax for;
- 4% to 2.5% for the first slab
- 3.5% to 2% for the second slab
- 3% to 1.5% for the third slab
Furthermore, the government has also proposed the abolition of federal excise duty. The 7% duty on transfers of commercial properties, plots, and houses has been abolished.
To encourage homeownership, the government has announced a tax credit on houses up to 10 marla and flats of 2,000 square feet. Additionally, the federal government has also pledged to expand mortgage financing, particularly for salaried individuals, to make housing more accessible to the masses.
Salient Features of the Sales Tax on Services
The finance minister proposed several salient features of the Sales Tax on Services for FY 2025-26.
For revenue measures;
- Integration of service providers with Board’s computerized system for real-time reporting of taxable service activity – General Order to prescript mode and manner.
- Board to notify a Negative List of exempt services for harmonized, smooth, and gradual transition from the positive list to the negative list. This will expand the scope of services leviable to service sales tax under the Islamabad Capital Territory.
To streamline measures;
- Exemption of sales tax on services acquired by diplomats and diplomatic missions etc. aligned with the scope of exemptions to such persons available under the Sales Tax Act, 1990, for uniformity and harmonized regime on goods and services.
