- The IMF agree to repress Fed on goods buyers.
- Approves the request to reduce the target of tax collection for March.
- Pakistan awaiting written response to finalize the proposal.
Islamabad: In the midst of current talks between the government, the International Monetary Fund (IMF), the latter agreed in principle to grant partial relaxations at the request of the Federal Board of Revenue (FBR) to reduce the tax rates (WHT) on 2%property purchases. The news was reported on Saturday.
The reduction of the tax on the purchase of goods will be in force from April 2025. However, tax rates to restraint on properties of properties will remain unchanged.
“In a major and long -awaited development for the real estate and construction sector, the government has convinced the IMF to reduce the rates of buyers by 2%,” confirmed the main official sources while speaking to publication.
The development must be taken in the context of the Association of Builders and Developers of Pakistan (ABAD) President Hassan Bakhshi, the complaint of the real estate sector, facing pressure in the Sindh and Punjab due to developers and housing companies being subject to a double taxation during the registration of properties at the initial award stadium.
The tax dispute has led to an impasse in the issue of numerous real estate registers through Punjab. The impasse stems from the interpretation by the provincial tax authorities of article 236c of the income tax order, 2001, which, according to them, applies to housing companies and promoters, creating uncertainty and delays in real estate transactions.
According to Bakhshi, the Board of Revenue (Bor), Punjab and Punjab Land Revenue Authority (PLRA) have also adopted the position that article 236c of the order also applies to the allocation registers.
Consequently, the housing companies had to pay a reservoir by virtue of this provision. “This exposed the real estate sector to double taxation,” he said.
In addition, the lender based in Washington has also agreed to reduce the law of the federal expansion (Fed) on goods buyers, while the rights to sellers will remain intact and have also approved the FBR request to reduce the target of tax collection for March 2025 of Rs60 billion, given the increase in the number of holidays due to the next EID UL FITR.
On the question of reducing property taxes, the FBR had asked the IMF to reduce the WHT prices for sellers and buyers under articles 236c and 236k, respectively. However, the fund has agreed to reduce WHT rates for buyers.
Wht rates for buyers currently vary from 3% to 4%, according to the slab. For the Fed, the highest 10% panel has been reduced to 9% for buyers.
The FBR has presented data to the IMF, demonstrating the need to reduce transaction costs for properties of properties, which invest significant amounts and face a heavy tax burden. It has been argued that the reduction in buyers’ tax rates would increase transactions in the real estate sector.
It should be noted that Islamabad and IMF officials held a virtual meeting on Friday evening, during which the Pakistani authorities expressed their confidence that discussions would help finalize the Economic and Financial Policy Agreement Protocol (MEFP) and will soon pave the way to a staff level (SLA). We expect it probably the last meeting, and the IMF could hit the SLA next week.
Consultations between the FBR and representatives of the real estate sector stressed that high tax charges caused a capital flight from the country.
After in -depth discussions, the IMF has agreed to reduce tax rates for buyers, but refused to provide sellers today.
The Pakistani authorities await the written response of the IMF, after which the proposal would be finalized and presented to the government for approval.
With regard to the target of tax recovery, the IMF has agreed to revise the FBR’s objective to the drop from RS12 970 billion to Rs12.332-12 334 billion for the current financial year. For March 2025, the FBR tax collection objective was set at Rs1220 billion.
However, the FBR requested a reduction of 70 billion rupees for March 2025, citing increased vacation due to Eid Ul-Fitr. The IMF accepted this reduction, but asked the FBR to increase the tax collections in April and May 2025 to reach the revised objective of RS12.334 billion by the end of June 2025.