2014-15 Budget Revelations Impact on Pakistani Real Estate Sector

2014-15 Budget Revelations Impact on Pakistani Real Estate Sector

The much hyped 2014-15 budget amounting to Rs. 3.936 trillion was recently announced in the Federal Parliament. International property portal Lamudi.PK looks into what effect this will have on the real estate market in Pakistan. The following points were raised during the budget announcement in Parliament:

  • In order to bring the real estate transactions under the tax net, an adjustable 1% Advance Tax will be collected on purchase of immovable property from taxpayers. However, properties valuing less than Rs.2 million and low-cost housing schemes by the government will be excluded from this.
  • To attract Foreign Direct Investment (FDI) in manufacturing, construction and housing sectors, the government has levied a reduction in Corporate Tax Rates to 20% from the standard 33%. However, the project needs to invest in a new industrial undertaking or a construction or housing project and at least 50% of the equity has to come from FDI.
  • There has also been exemption of Mortgage Loans which will boost the housing industry in today’s economic situation, as it impossible for a mere salaried employee to own a house on commercial mark-up rates. Once this industry takes off, there will be provision of cheap housing and increase in tax revenues from housing and allied sectors.
  • Moreover, Punjab, the most prosperous province of Pakistan, is expected to increase its property tax in its provincial budget to be announced on the 11th is expected to increase from 60% to 105%. This tax has not increased since 2001, while the rents of these properties have hiked during this time. Moreover, the government is also working on introducing a computerized system which would enable the citizens to view their tax payments and make them online. However, the exact tax amount is yet to be announced and will vary according to the different property categories.

Saad Arshed, Country Director, of Lamudi.pk states: “The reduction in corporate tax rates will accelerate the already booming real estate sector. Moreover, the exemption of mortgage rates is a really good news for those dreaming to have their own home.”

Comments (3)

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  1. Habib Ur Rehman says:

    In my assessment 1&2% adjustable tax on properties worth more than 2 millions, would result in drastic decline in real estate as only the genuine investors will be stay in the market, who would be able to justify the sources of their investments.

    • estate_owner says:

      sorry to say, there will be no impact of budget in the market, its all going very smooth.
      the difference is that the seller will demand that 2% high of total demand to pay tax… thats it…!!! if u pay tax , no one gonna ask the source…. actually they need amount of tax to return in capital amount.

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