The government is considering abolishing the Federal Excise Duty (FED) on the first property transaction, sources in the Finance Ministry revealed, in major good news for property buyers.

The proposal, reportedly approved by the International Monetary Fund (IMF), aims to encourage investment in the real estate sector and stimulate economic activity.

Currently, the FED on property transactions ranges from 3% to 7%:

3% for tax filers
5% for late filers
7% for non-filers

According to sources, if approved, the new policy would waive FED on the first transaction of a property, while after the first time, full tax will be deducted on every subsequent property transaction under the existing structure. However, all other withholding taxes related to the real estate sector will remain intact, as per the Federal Board of Revenue (FBR).

No change in taxes for sellers

While the government is considering tax relief for buyers, sources confirm that no changes will be made to the tax rate on property sellers. The move is seen as a balanced approach to promote real estate investments while maintaining revenue generation.

Also Read: IMF allows Re1 per unit decrease in electricity rates

Sources indicate that the IMF has also proposed reducing other taxes on real estate transactions, but opposition to such measures remains within policy circles.

The IMF had previously approved a reduction of Re1 per unit in electricity tariffs, providing much-needed relief to all consumers across the country. The relief will be funded through the revenue generated from a levy imposed on captive power plants using natural gas.

The government has introduced this levy as part of its broader strategy to manage energy sector finances efficiently and sustainably.

Additionally, the government is in the process of finalizing a relief package for electricity consumers, aiming to offer further financial support to struggling households and industries. However, the implementation of this package is subject to IMF approval.