The Federal Government of Pakistan has introduced a Federal Excise Duty (FED) on property sales and transfers, applying it to both tax filers and non-filers starting July 1, 2024.
The legislative change introducing a Federal Excise Duty (FED) on property transactions follows the enactment of the Finance Bill 2024, which the President approved. The government will implement this new regulation starting in July. The bill mandates a 3% FED on Property for the sale of real estate properties, significantly impacting the operations of builders and developers.
Specifically, the bill stipulates that a 3% FED will be levied on commercial plot transactions. The same 3% rate applies to registered filers with the tax authority. However, late filers will be subjected to a 5% FED, while non-filers will face a higher rate of 7%.
Read: Pakistan’s 2024-25 Budget Targets Non-Filers: Bans on Vehicles and Property Purchases
Moreover, the legislation introduces a Capital Value Tax (CVT) on various properties in Islamabad. Farmhouses and larger residential units in Pakistan are now subject to varying Capital Value Tax (CVT) rates, depending on their size. Properties ranging from 1,000 to 2,000 square yards will attract a Capital Value Tax (CVT) of 1 million PKR, and those exceeding 2,000 square yards will face a tax of up to 15 million PKR.
The bill also sets a CVT of 500,000 PKR for farmhouses and homes ranging from 2,000 to 4,000 square yards and 1 million PKR for those exceeding 4,000 square yards.
The new FED on Property is part of the government’s broader fiscal policy to regulate the real estate market and increase tax revenues from property transactions.
