Government Abolishes FED on Property Purchase and Transfer

In a significant move aimed at easing the financial burden on property transactions, the federal government has announced the complete abolition of Federal Excise Duty (FED) on the purchase or transfer of immovable property. This change is effective from July 1, 2025.

Previously, FED on property transactions ranged from 3 percent to 7 percent, depending on the nature and value of the property. “Federal excise duty on the allotment and transfer of residential and commercial plots, imposed through the Finance Act, 2024, is now proposed to be withdrawn,” an official statement from the Federal Board of Revenue (FBR) confirmed. This means that individuals and entities acquiring property will no longer be subject to this particular duty.

Updated Advance Tax Rates on Immovable Property: Sale and Purchase

The federal government has introduced revised advance tax rates for both the sale and purchase of immovable property as part of the latest budget. These rates are structured in slabs based on the gross consideration received for sales and the fair market value for purchases.

It’s important to note that tax rates for filers are generally lower than those for non-filers or late filers as an incentive for tax compliance. The tables below present the newly announced tiered rates for different property transactions.

Advance Tax Rates for Immovable Property Transactions

Value Threshold (PKR)	Advance Tax Rate on Sale (Section 236C)	Advance Tax Rate on Purchase (Section 236K)
Up to 50 million	4.5%	1.5%
Exceeds 50 million but does not exceed 100 million	5%	2%
Exceeds 100 million	5.5%	2.5%

This policy adjustment is expected to stimulate activity in the real estate sector by reducing the overall upfront cost for property buyers, especially active tax filers who also benefit from a reduced advance tax rate on sales. The government’s decision signals a targeted approach to tax reforms, aiming to streamline certain levies while maintaining differentiated rates to encourage broader tax compliance.