The Karachi Chamber of Commerce and Industry (KCCI) has put forward a suggestion to the government for a significant tax overhaul aimed at boosting the struggling real estate sector. Their proposal calls for an exemption from income tax on properties valued at up to Rs 10 million.
Budget Proposal Aims to Counter Real Estate Slowdown
This recommendation forms part of the KCCI’s comprehensive set of budget proposals for the upcoming fiscal year 2025-26, which have been submitted to the government in anticipation of the federal budget announcement.
Taxation Measures Blamed for Market Downturn
According to the KCCI, the real estate sector, which plays a crucial role in Pakistan’s economy and supports a vast network of over 45 related industries, is currently experiencing a downturn. The chamber attributes this slowdown largely to the taxation measures introduced in the Budget for 2024-25, arguing that these measures have created financial difficulties for both individuals looking to purchase property and those investing in the sector.
Proposal Targets Low and Middle-Income Groups
In their submitted proposal, the KCCI emphasized that the current tax policies have disproportionately affected individuals in the low- and middle-income brackets. This has made it more challenging for them to afford homes, pushing property ownership further out of reach. Consequently, investment in the real estate sector has decreased, market activity has slowed down, and the sector’s overall contribution to the nation’s economic growth has weakened.
KCCI Believes Exemption Will Stimulate Demand
The KCCI stated that “Granting tax exemptions on properties valued up to Rs 10 million will act as a stimulus for demand, particularly among those buying their first homes, and will provide much-needed relief to segments of society facing financial constraints.” The chamber further highlighted that this measure has the potential to act as a catalyst for economic recovery by making housing more affordable and encouraging greater participation in the property market.
Expected Benefits: Investor Confidence and Housing Accessibility
Furthermore, the KCCI believes that this targeted tax relief can help restore confidence among investors, promote inclusive economic growth, and help address the housing shortage in urban centers like Karachi, where the real estate sector remains a vital engine for economic activity and job creation.
Aiming for a Balanced Policy Framework
By addressing the obstacles created by high taxation, the KCCI aims to establish a more balanced policy framework that not only supports the government’s fiscal goals but also promotes social equity and overall economic expansion.
Policy Discussion Expected Among Government Officials
The proposals put forth by the Karachi Chamber are likely to generate considerable discussion among government policymakers as they navigate the need to balance revenue generation with the imperative to stimulate growth in the private sector and improve housing accessibility for the general public.
