International Monetary Fund (IMF) has granted partial approval for a 2% reduction in withholding tax on property purchases, following a request from the Federal Board of Revenue (FBR).
The change will take effect in April 2025 and is expected to boost business activity in the real estate sector. However, the withholding tax on property sellers will remain unchanged.
According to FBR officials, an agreement has also been reached to reduce the Federal Excise Duty on property purchases. The government convinced the IMF to lower the withholding tax rate for buyers, while continuing to collect the tax from sellers.
FBR officials believe this step will facilitate consensus on the draft of the Memorandum of Economic and Financial Policies, paving the way for a final agreement. Progress on this matter is expected in the coming week, as FBR had initially requested the IMF to reduce withholding tax for both buyers and sellers.
In a related development, the IMF has also approved a loan of PKR 1,250 billion from banks to reduce the circular debt in the power sector. Additionally, discussions are ongoing between the IMF and the government regarding budgetary targets for the upcoming fiscal year.
Experts have welcomed this development, stating that the relief measures will positively impact the real estate, property, and construction sectors.
