As Pakistan prepares to unveil its budget for fiscal year 2026-27, the real estate sector has pinned high hopes on tax relief and policy incentives, arguing that reviving property and construction activities could provide a significant boost to the national economy.
Industry stakeholders say the sector, which is linked to more than 80 industries, has been under pressure due to additional taxes and declining business activity. They believe meaningful relief in the upcoming budget could stimulate investment, increase government revenues and create new employment opportunities.
Stakeholders have called on the government to reduce withholding tax, rental income tax and capital gains tax in the upcoming federal budget.
They argue that lower taxes would encourage more property transactions, expand economic activity and ultimately increase tax collection through higher market participation.
The sector has also demanded the immediate abolition of Section 7E, which imposes deemed income tax on immovable property.
FBR prepares relief proposals
According to reports, the Federal Board of Revenue (FBR) has prepared proposals aimed at providing relief to the real estate sector.
The proposed measures include significant reductions in various property-related taxes and initiatives designed to attract foreign investment into the sector.
The proposals also focus on creating greater convenience for overseas Pakistanis and local investors looking to invest in real estate and construction projects.
Sector linked to more than 80 industries
Experts and stakeholders emphasize that the real estate sector plays a crucial role in Pakistan’s economy because it directly and indirectly supports more than 80 industries.
These include construction materials, steel, cement, ceramics, electrical equipment, transportation and various service industries.
They argue that reviving real estate activity would have a multiplier effect across the economy, helping increase GDP growth and generating employment opportunities.
Industry representatives say excessive taxation has slowed activity in the property market and negatively impacted related industries. Many stakeholders believe that without meaningful reforms, investment in the sector could continue to decline.
However, recent signals from the government have raised expectations that relief measures may be included in the upcoming budget.
Business community calls for abolition of Section 7E
Business leader Kashif Chaudhry said the government must take immediate steps to revive the sector. He argued that Pakistan’s struggling economy cannot recover without restoring activity in the real estate market.
According to Chaudhry, the government should completely abolish Section 7E in the upcoming budget and reduce property purchase and sale taxes to one percent.
He said increased buying and selling activity would ultimately result in higher tax revenues for the government.
PM hints at relief package
Stakeholders have drawn optimism from recent discussions between Prime Minister Shehbaz Sharif and representatives of the business community.
During those meetings, the prime minister reportedly hinted at major relief measures for the construction and real estate sectors. The development has strengthened expectations that the government may introduce significant reforms in the budget.
Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Atif Ikram Sheikh said the construction industry is likely to receive substantial relief. According to him, taxes imposed under Sections 236C and 236K are expected to be abolished.
He also stated that the government is considering removing Section 7E, which has long been a key demand of real estate stakeholders.
Foreign investment, remittances could rise
Experts believe that reducing taxes and simplifying regulations could help restore investor confidence. They say improved confidence among overseas Pakistanis and foreign investors could lead to increased capital inflows into the property market.
A revival in investment activity could also contribute to higher remittance inflows, providing additional support to Pakistan’s economy.
With the federal budget approaching, stakeholders say all hopes are now attached to the government’s final decisions.
They maintain that if meaningful support is provided in consultation with the IMF, the real estate sector has the potential to deliver strong economic results, stimulate growth and create thousands of jobs across the country.
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