ISLAMABAD – Budget 2026-27 is taking shape, and the government is reportedly considering major tax cuts on property transactions to revive struggling real estate sector. The move sparked excitement could lower costs for buyers and sellers, but it is still under discussion with global lender.

Pakistani government is weighing shift in property taxation as it prepares FY2026–27 budget, in what could become a major attempt to revive Pakistan’s struggling real estate and construction sectors.

According to people familiar with discussions, officials are considering sharply reducing withholding taxes on property transactions. For tax filers, the rate on property purchases may be cut from 1.5% to just 0.25%, while the tax on property sales could come down from 4.5% to 1.5%.

If approved, these changes would mark one of the most notable tax relaxations for the property market in recent years, aimed at lowering transaction costs and encouraging more buying and selling activity.

Government officials argue that the move could help unlock a stagnant market. The idea is that lower taxes would encourage higher transaction volumes, which could eventually offset the reduced rates through broader overall collections.

But the proposal is still under discussion and is facing scrutiny from the International Monetary Fund (IMF), which is reportedly cautious about any measures that could weaken Pakistan’s already tight revenue position.

At same time, supporters of plan point to wider economic importance of real estate and construction. The sectors are closely tied to industries such as cement, steel, ceramics, transport, and banking, meaning any revival could have spillover effects across the economy, potentially supporting jobs and investment.

For now, the proposals remain part of ongoing budget negotiations, with the final decision expected once discussions with the IMF are concluded.

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