Islamabad, February 21, 2025 – Pakistan’s tax collection from property transactions has seen a significant rise, reaching Rs 130 billion during the first seven months (July–January) of the fiscal year 2024-25, according to sources within the Federal Board of Revenue (FBR). This marks a 24% increase from the Rs 105 billion collected in the same period of the previous fiscal year, highlighting the impact of recent policy shifts designed to improve tax compliance and transparency.
The substantial growth in property tax collection can largely be attributed to the policy changes implemented by the FBR in the federal budget for 2024-25. These amendments have expanded the scope of taxation, ensuring that a larger number of property transactions fall under the tax net. Prior to these changes, Section 100BA of the Income Tax Ordinance mandated higher withholding tax rates for individuals who were not listed on the Active Taxpayers’ List (ATL), as specified in the Tenth Schedule of the ordinance. However, the Finance Act, 2024, has broadened the scope of this provision by including individuals who, although listed on the ATL, failed to file their tax returns on time.
This modification to the tax framework has contributed significantly to the increased tax collection from property transactions. Under the updated policy, there are now two categories of higher tax rates: one for individuals who are not listed on the ATL at the time of the transaction, and another for those listed on the ATL but who failed to meet the filing deadline for their returns.
FBR data reveals that tax collection from the sale of immovable property saw a notable 30% increase, reaching Rs 64 billion during the first seven months of FY25, compared to Rs 49 billion in the same period of the previous fiscal year. Similarly, tax collection from the purchase of property also rose to Rs 66 billion, up from Rs 56 billion in the previous fiscal year.
Experts believe that the sharp rise in property tax collections is reflective of improved compliance and tighter monitoring by tax authorities. With stricter enforcement of tax regulations, the government’s ongoing push for greater transparency in the real estate sector and enhanced monitoring mechanisms are driving the growth in tax revenues. As property remains a vital investment sector in Pakistan, the FBR is expected to continue its efforts to tighten regulations, ensuring that all tax liabilities are fully met and contributing to the country’s overall revenue generation.
The government’s approach to bolstering property tax collection through stricter rules has come at a time when Pakistan is seeking to address its fiscal challenges and expand its revenue base. The rise in property-related tax collections suggests a more efficient and transparent system is taking shape, providing much-needed support to Pakistan’s broader economic goals.
Given the significance of the property market as a key sector for investment, particularly in urban areas, the FBR is expected to further strengthen its tax enforcement measures to enhance revenue generation. As more property transactions come under scrutiny, authorities are optimistic that this trend of higher compliance will continue, helping to sustain the upward trajectory in tax collections and improve the financial health of the country.
In summary, Pakistan’s property tax collection surge in FY25 reflects the effectiveness of new policy changes aimed at tightening tax compliance and ensuring a fairer tax structure. These efforts are likely to continue shaping the future of the real estate sector while bolstering the country’s revenue base.