IMF Agrees to Cut Property Tax for Buyers Starting April 2025

The International Monetary Fund (IMF) has tentatively agreed to lower the withholding tax (WHT) on property purchases by 2% starting April 2025, while keeping the tax rates for property sellers unchanged, according to The News.

This follows a request from the Federal Board of Revenue (FBR) to ease transaction costs in the real estate market. The IMF also approved a drop in Federal Excise Duty (FED) for buyers, reducing the top rate from 10% to 9%, though the FED for sellers will stay the same. These changes were discussed during a virtual meeting between Pakistani officials and the IMF on Friday night, moving closer to finalizing the Memorandum of Economic and Financial Policies (MEFP). A staff-level deal is expected next week.

The FBR had suggested cuts under Sections 236C and 236K of the Income Tax Ordinance for both buyers and sellers, but the IMF only agreed to reduce taxes for buyers. Currently, WHT rates for buyers are between 3% and 4%, based on property value.

The FBR shared data showing that high costs were pushing investors away and slowing real estate activity. They told the IMF that lowering taxes for buyers could revive the sector, which has lost capital due to heavy taxation.

Separately, the IMF okayed a Rs60 billion cut in the FBR’s March 2025 tax target, dropping it from Rs1,220 billion to Rs1,160 billion because of fewer working days during Eid ul-Fitr. The yearly target was also adjusted from Rs12,970 billion to Rs12,332–12,334 billion. The IMF wants the FBR to make up the March dip by collecting more in April and May to hit the revised annual goal.

Additionally, the IMF backed the government’s plan to raise Rs1,257 billion through banks to tackle the power sector’s rising circular debt.