The decision is expected to be made due to the low revenue collection in the first half of the fiscal year.

The Federal Board of Revenue (FBR) is anticipated to propose the removal of the FED on the allotment and transfer of both commercial and residential properties, with this change potentially taking effect in the 2025-26 budget.

Currently, developers and builders must collect FED at rates ranging from 3 per cent to 7 per cent, depending on the buyer s tax status.

However, the lack of a monitoring system has limited the effectiveness of this tax. At present, developers and builders are required to collect 3% duty on the gross amount of consideration for the allotment or transfer of commercial property or the first allotment or transfer of open plots or residential properties when the buyer is listed as an active taxpayer.

If the buyer has not filed an income tax return, the FED is 5% of the gross consideration, and if the buyer is not listed on the active taxpayers’ list, the duty increases to 7%.

Moreover, the government is mulling over reducing taxes on property transactions. The Taskforce on Housing Sector Development has recommended eliminating the capital value tax (CVT) in Islamabad, standardizing stamp duties across provinces, and offering tax exemptions for real estate investments up to Rs. 50 million.