Tax relief for the real estate sector in the budget 2025-26
ISLAMABAD:
The federal government has shared the budget for the year 2025–26. It includes many important changes in taxes, pensions, and real estate. The goal is to collect more tax fairly, help the economy grow, and reduce the government's financial burden. Finance Minister Muhammad Aurangzeb announced these updates in his budget speech.
Main Budget Points
Category | Measure |
Super Tax | Cut by 0.5% for companies earning Rs200m–Rs500m yearly |
Withholding Tax on Property | Reduced from 4% to 2.5%, 3.5% to 2%, and 3% to 1.5% in different slabs |
Federal Excise Duty (FED) | Removed on sale of commercial properties, plots, and houses |
Stamp Duty in Islamabad | Reduced from 4% to 1% |
Mortgage Financing | Tax benefit for houses up to 10 marlas and flats up to 2,000 sq ft |
Interest Income Tax | Increased from 15% to 20% (Not for National Savings Schemes) |
Pension Tax | 5% tax on pensions over Rs10 million per year (under age 70) |
E-commerce Tax | Online sellers must pay tax and report monthly transactions |
Debt Income Tax | 25% tax on money earned through lending |
Solar Panel Imports | 18% tax added to support the local solar panel industry |
Help for Companies
The government is offering tax relief to businesses. Companies earning between Rs200 million and Rs500 million yearly will pay 0.5% less Super Tax. The tax on buying property has also been reduced in all categories.
They have also removed the 7% Federal Excise Duty on selling commercial properties, houses, and plots. People who buy houses (up to 10 marlas) and flats (up to 2,000 sq ft) will get tax benefits through mortgage financing.
New Taxes and Reforms
To improve the tax system:
- Tax on interest income is now 20% (before it was 15%), but National Savings Schemes are not affected.
- A 25% tax will be charged on income from lending money (debt income).
- Online businesses and e-commerce sellers will now be taxed. They must submit monthly reports of their sales and earnings.
Changes in Pension Rules
The government is changing the pension system to make it more sustainable:
- People under 70 who receive over Rs10 million per year in pensions will pay 5% tax.
- Early retirement is being discouraged.
- Future pension increases will follow the Consumer Price Index (CPI).
- Family pensions will stop after 10 years from the death of the spouse.
- Retired people who start working again will have to choose between pension or salary.
Other Important Updates
- The government saved Rs3,000 billion by changing agreements with power companies (IPPs).
- Electricity prices have gone down by over 31%.
- Power losses in distribution have been reduced by Rs140 billion.
- A new AI system will help track sales and production in industries like cement, fertilizer, beverages, and textiles.
- From July 1, 2025, tax returns will be madesimpler— only 7 details will be required instead of 800+ fields.
This budget brings both relief and changes. It supports businesses, encourages activity, and brings more people and sectors into the tax system. It will be important to see how these steps affect Pakistan’s economy in the coming year.
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