Tax

HomepageTax

Category: Tax

IHC Grants Interim Relief to Islamabad Taxpayers
CategoriesNews Property Property Taxes Real Estate Tax

IHC Grants Interim Relief to Islamabad Taxpayers, Halts Property Tax Collection

ISLAMABAD: The Islamabad High Court (IHC) has suspended the collection of property tax from residents of the federal capital, delivering interim relief to taxpayers who had challenged the levy imposed by the Metropolitan Corporation Islamabad (MCI).

The order was issued by a single bench during the first hearing of a writ petition filed by Muhammad Munir Ahmed Chaudhary and Ahmed Hasan Rana, with the latter also appearing as counsel for the case.

The petition contests Gazette Notification No. 404(1)-4/2024, issued on March 14, 2024, as well as a subsequent property tax bill of Rs. 846,398, served on the petitioners on April 24, 2026. Given that thousands of property owners across Islamabad face similar demands, the case has emerged as a key test case with wide-reaching implications.

Counsel for the petitioners argued that the notification contravened the Islamabad Capital Territory Local Government Act, 2015, and the Urban Immovable Property Tax Act, 1958. They contended that MCI lacked the legal authority to impose such a tax and that the notification had been issued by an administrator rather than an elected local government body, as required by law.

It was further argued that the tax demand was arbitrary, lacking proper assessment and failing to provide taxpayers a hearing. The petitioners cited a relevant Supreme Court ruling to reinforce their position.

After hearing preliminary arguments, the court concluded that the petitioners had established a prima facie case, with the balance of convenience favouring the taxpayers. Consequently, notices were issued to MCI, its Directorate of Revenue, the Capital Development Authority, and federal authorities through the Interior and Cabinet divisions.

The bench suspended the disputed tax bills until the next hearing and adjourned proceedings for four weeks, meaning affected residents will not be required to make payments in the interim.

For moreย news on real estateย and special reports, visitย Chakor.

Sources:

99% Tax Target
CategoriesNews Budget Developments Economy Property Property Taxes Tax

Punjab Hits 99% Tax Target, Plans FBR-Like Tax Body

LAHORE: Punjab’s government has announced plans to create a unified revenue authority modelled on the Federal Board of Revenue, consolidating all provincial tax streams under a single institutional framework during the upcoming fiscal year.

Finance Minister Mian Mujtaba Shujaur Rehman disclosed the initiative at a post-budget press conference on Wednesday, citing strong performance in the outgoing fiscal year as grounds for the reform. The province met 99 percent of its tax collection target, prompting officials to raise the revenue goal for FY 2026-27 by 46 percent. Own-source revenues are projected to grow between 30 and 40 percent, a gain the minister attributed to curbing corruption within tax administration and broadening the provincial tax base.

Under the new targets, the Punjab Revenue Authority has been assigned a collection goal of Rs528 billion, while the Excise and Taxation Department will aim for Rs124 billion. Non-tax departments are expected to contribute Rs461 billion, with the Mines and Minerals Department emerging as the leading performer in that category.

Rehman noted that only modest revisions to existing tax rates were proposed for the coming year, given current economic conditions. He explained that a Rs546 billion grant to the federal government had reduced Punjab’s development budget from Rs1,240 billion to Rs752 billion, though officials maintained that no development priorities were compromised.

Addressing reporters’ questions, the minister confirmed that proposed amendments to the agricultural tax, unchanged since 1998, would apply only to landholdings exceeding 12.5 acres.

Senior Minister Marriyum Aurangzeb, also present at the briefing, rejected claims that southern Punjab or the agriculture sector were being neglected, pointing to rising acreage and crop output. She further clarified that reports of a Rs145 billion traffic-fine target were inaccurate, stating that the actual figure is Rs45 billion. Officials added that documentation for 493 new development schemes, including a laptop distribution programme, would be finalised by June 30.

For moreย news on real estateย and special reports, visitย Chakor.

Sources:

FBRโ€™s New Digital Mechanism
CategoriesNews Economy Property Taxes Tax

FBRโ€™s New Digital Mechanism Aims to Curb Prolonged Tax Litigation

ISLAMABAD: The Federal Board of Revenue (FBR) has introduced a digital solution designed to expedite the resolution of tax disputes and curb prolonged litigation through a technology-driven process. The initiative was formalised under a new provision in the Finance Bill 2026, which empowers the FBR to establish a digital system to generate settlement offers for registered taxpayers prior to the issuance of final assessment orders.

The mechanism is intended to facilitate early resolution of tax proceedings by giving taxpayers an opportunity to settle disputes through a transparent, automated framework rather than pursuing lengthy adjudication.ย 

According to officials, the system-generated settlement offers will take into account several factors, including the stage of the proceedings, the taxpayer’s compliance history on record with the FBR, the nature of the identified discrepancy, and any other criteria the Board deems relevant.

Under the proposed framework, taxpayers who receive a settlement offer will have a ten-day window to accept it through the IRIS portal and deposit the specified settlement amount. Once payment is made, the issues raised in the relevant notice or audit report will stand abated, effectively closing those proceedings.

Commenting on the development, tax expert Arshad Shehzad said the mechanism has the potential to significantly reduce litigation, accelerate dispute resolution, and improve revenue collection by encouraging voluntary compliance.ย 

He noted, however, that the framework could be further strengthened by introducing an additional layer of review, suggesting that a specialised committee be established to examine taxpayers’ responses and objections before assessments are finalised, to ensure greater fairness and equity in the process.

Shehzad described the initiative as part of broader efforts to modernise Pakistan’s tax administration through technology-driven reforms, reduce compliance costs for taxpayers, and enhance certainty in tax matters.

For moreย news on real estateย and special reports, visitย Chakor.

Sources:

CategoriesNews Economy Property Property Taxes Real Estate Tax Urban Developments & Planning

Punjab Recovers Rs9.3 Million But Misses FY26 Property Tax Target

LAHORE: The Excise, Taxation and Narcotics Control Department has been unable to meet its property tax collection goal for FY2025-26, despite revising property valuation rates and widening the tax base earlier in the year. With two weeks left before the June 30 deadline, officials have shifted into emergency mode.
The Director General of Excise and Taxation has cancelled all staff leave and ordered field teams to stay on active recovery duty until the fiscal year closes. As part of the crackdown, officers across the department’s five property tax zones sealed 362 properties belonging to defaulters in a single week, recovering Rs9.3 million in unpaid dues over the same period.

Zone-IV Gujar Khan stood out as the best-performing area. Excise and Taxation Officer Abdul Qadir led recoveries in the zone, followed by ETO Asim Sardar and ETO Kulsoom Zahra.

At the other end of the scale, Zone-V, which covers several upscale neighbourhoods with large, high-value properties, posted the weakest recovery numbers. Officials say complaints have already been filed with the Director General over the reporting of allegedly bogus taxable properties from that zone, raising questions about data integrity within the system.

Field officers, however, remain hopeful. They say notices have been issued to all known defaulters and enforcement operations are running throughout the day across all zones.

For moreย news on real estateย and special reports, visitย Chakor.

Sources:

Finance Bill 2026-27
CategoriesNews Budget Economy Property Property Taxes Real Estate Tax

Government Reduces Property Transfer Taxes by 50% in Finance Bill 2026-27

ISLAMABAD: The Federal Government has announced a series of significant tax reductions in the Finance Bill 2026-27, aimed at revitalising Pakistan’s real estate sector and reducing the financial burden on property buyers and sellers nationwide.

Under the new measures, the advance tax on property sales has been reduced by half. Sellers on the Active Taxpayers List (ATL) will now pay a flat rate of 2.75% under Section 236C, down from the previous 5.5%. Similarly, buyers who are registered filers will benefit from a reduced advance tax rate of 1.25% on the fair market value of purchased properties under Section 236K, compared to the earlier rate of 2.5%.

In a landmark move, the Finance Bill officially abolishes Section 7E, which levied a deemed income tax on immovable properties by taxing owners on a notional 5% of income, regardless of whether the property generated any actual earnings.

The Federal Constitutional Court had already declared Section 7E unconstitutional and void ab initio in May 2026, and the Finance Bill now formally removes it from the statute books.

The government has also abolished the Capital Value Tax (CVT) on foreign assets held by resident Pakistanis. Previously, Pakistanis owning properties abroad were required to pay CVT on their declared foreign wealth. The removal of this tax is expected to encourage greater transparency and documentation of overseas assets.

Furthermore, the Finance Bill introduces important amendments to Section 76(8A) regarding inherited property. The cost of an inherited asset will henceforth be recorded at the fair market value on the date of the original owner’s death, ensuring that heirs are not subjected to capital gains tax on value appreciation that occurred prior to inheritance.

It is noteworthy that while registered filers receive considerable relief, non-filers and individuals on the Non-Active Taxpayers List will continue to face substantially higher punitive tax rates during property transactions, reinforcing the government’s broader strategy of incentivising tax compliance and expanding the documented economy.

For moreย news on real estateย and special reports, visitย Chakor Ventues.

Sources:

CategoriesNews Budget Economy Tax

PM Shehbaz Signs Federal Budget 2026โ€“27 Draft

ISLAMABAD: Prime Minister Shehbaz Sharif signed the Federal Budget 2026โ€“27 draft on Friday after chairing a federal cabinet meeting in Islamabad. Finance Minister Muhammad Aurangzeb is set to present it before parliament the same day.

The budget carries a total outlay of Rs17.1 trillion, with a GDP growth target of 4.1 percent, an inflation projection of 8.4 percent, and an FBR tax revenue target of Rs15.267 trillion. New tax measures between Rs660 billion and Rs700 billion are also expected.

Addressing the cabinet, the PM acknowledged that taxation would create hardship but described it as necessary to correct long-standing economic imbalances. He noted that inflation had fallen from 38 percent over the past two years and the policy rate had dropped from 22.5 percent to 11 percent, though regional instability from the Gulf crisis had slowed further progress.

Key Tax Proposals

The salaried class may receive up to Rs50 billion in income tax relief through revised slabs and reduced rates on monthly earnings above Rs183,400. A 2 percent cut in the super tax rate and removal of the 1 percent advance income tax on exporters are also under consideration.

For real estate, withholding tax on property purchases for filers may drop from 1.5 percent to 0.25 percent, while the seller tax could fall from 4.5 percent to 1.5 percent. The IMF has reportedly agreed in principle to support the property tax reductions. Non-filers are not expected to benefit.

The BISP quarterly stipend may rise from Rs13,000 to Rs14,500, with Rs838 billion allocated to the programme.

All four provincial governments endorsed the national development plan through the NEC ahead of the budget’s presentation. The PM also acknowledged support from coalition partners PML-N, PPP, MQM, IPP, BAP, and PML-Q in finalising the budget.

For moreย news on real estateย and special reports, visitย Chakor Ventues.

Sources:

  • The Express Tribune
  • ARY News
  • Pakistan Observer
  • Pakistan Today
  • TechJuice
  • Bloom Pakistan
  • Daily Pakistan
  • Business Recorder
  • Pakistan Times
  • Lahore Real Estate
CategoriesNews Budget Economy Power/Energy Tax

From Solar to Stocks: Pakistanโ€™s Budget 2026-27 Promises Tax Continuity

ISLAMABAD: The federal government has decided to maintain existing tax rates on solar panels, stationery items, and the stock market in the upcoming Budget 2026-27, providing relief to consumers and investors who had feared potential increases.

According to senior tax officials, the earlier proposal to raise sales tax on solar panels from 10 to 18 percent has been formally withdrawn. This decision is expected to sustain the momentum of solar energy adoption across Pakistan, particularly among households and small businesses increasingly reliant on renewable energy solutions amid persistent power outages.

Similarly, the proposed hike in sales tax on stationery items will not be pursued in the forthcoming budget. The move is likely to be welcomed by students, educational institutions, and the stationery trade, which had raised concerns about the impact on affordability of any such increase.

Stock market taxation will also remain unchanged, effective July 1, 2026, offering a degree of stability to investors and market participants who have been closely monitoring pre-budget policy signals.

On the income tax front, the government intends to raise the threshold for the highest tax slab for salaried individuals. Simultaneously, the surcharge currently levied on the highest income earners is set to be abolished, representing a structural adjustment aimed at rationalising the direct tax framework.

A significant development for the export sector is the likely abolition of the one percent tax on exports. Highly placed officials confirmed that this relief measure forms part of a broader exporter support package to be announced in the budget speech. The industry has long advocated for the reinstatement of the Final Tax Regime with a one percent turnover tax, calling for protection from undue regulatory pressure.

The tax status of the real estate sector, however, remains under deliberation and has not yet been finalised.

For moreย news on real estateย and special reports, visitย Chakor Ventures.

Sources:

CategoriesConstruction Budget Developments Economy Tax

ABAD Urges Government to Cut Property Transfer Taxes Ahead of Federal Budget 2026-27

ISLAMABAD: The Association of Builders and Developers of Pakistan (ABAD) has formally called on the federal government to introduce tax relief measures for the real estate sector in the upcoming Budget 2026-27, warning that the current tax burden is deterring domestic and foreign investment. The federal budget is scheduled to be announced on June 10.

ABAD Chairman Muhammad Hassan Bakshi stated that the construction and real estate sector, with an estimated market value of $1 trillion, currently contributes only 2.2 to 2.5 percent to Pakistan’s GDP. He argued that policy reforms aligned with regional benchmarks could raise that contribution to 15 percent.

A central concern raised by ABAD is the high cost of property transfers. For tax filers, the transfer cost currently stands at 10 to 12 percent, while non-filers face rates as high as 30 to 32 percent. By comparison, the transfer cost in Dubai is four percent. Bakshi urged policymakers to bring Pakistan’s rates in line with Dubai or lower, to make the market competitive and attract capital held abroad.

ABAD has also requested that builders be taxed on a per-square-foot basis, a measure it says would simplify compliance and reduce disputes with tax authorities. Relief for first-time homebuyers was also among the association’s demands.

Beyond taxation, ABAD called for the digitalisation of land records and approval processes nationwide to reduce corruption and improve investor confidence. The association also emphasised the need for a long-term, legislation-backed policy developed in consultation with industry stakeholders.

The construction sector is the second-largest employer in Pakistan after agriculture, with 72 industries linked to it. Lower tax rates, ABAD maintains, would ultimately increase government revenue by encouraging greater compliance rather than avoidance.

Muhammad Waqas Ghani, Head of Research at JS Global Capital Limited, described potential real estate incentives in Budget FY27 as a positive development, noting that investment flows into the sector are likely to continue in the coming months.

Pakistan is currently operating under a $7 billion International Monetary Fund (IMF) loan program. The IMF has called on the country, which has a tax-to-GDP ratio of approximately 10 percent, to broaden its tax base by bringing sectors such as real estate, agriculture, and retail more fully into the tax net. The government is also targeting approximately Rs860 billion ($3.1 billion) in new tax revenue in the coming fiscal year.

For moreย news on real estateย and special reports, visitย Chakor Ventures.

Sources:

Automate Income Tax Collection Using AI
CategoriesNews Tax

PM Shehbaz Orders FBR Pilot Project to Automate Income Tax Collection Using AI

ISLAMABAD: Prime Minister Shehbaz Sharif on Thursday directed the launch of a pilot project for a proposed automated income tax collection system in the federal capital, Islamabad, marking a significant step in the government’s ongoing efforts to modernise Pakistan’s revenue infrastructure.

The directive was issued during a high-level review meeting chaired by the Prime Minister at the Prime Minister’s Office, attended by Finance Minister Muhammad Aurangzeb, State Minister for Finance Bilal Azhar Kayani, and other senior officials. The meeting conducted a detailed assessment of the Federal Board of Revenue’s (FBR) ongoing reform measures to make inland revenue collection more effective, transparent, and faceless.

Addressing the gathering, Prime Minister Shehbaz described the initiative as a milestone in the government’s broader reform agenda. He stressed that minimising human intervention and curtailing discretionary powers within the tax collection mechanism were urgent priorities, as they would directly reduce corruption and improve institutional accountability.

The proposed system is designed to leverage modern technology and artificial intelligence to identify under-declared income and assets by cross-referencing data across property, vehicle, and banking records. To further strengthen the framework, the meeting proposed establishing three dedicated wings: a National Faceless Audit Wing, a National Assessment Wing, and a Field Operations Wing, each intended to streamline and safeguard the integrity of the tax process.

The Prime Minister affirmed that the successful implementation of this system would not only boost national revenue but also foster greater transparency, fairness, and public trust in the taxation system. He reiterated the government’s commitment to continuing FBR reforms to comprehensively document the economy and meaningfully expand the tax net.

On a separate note, the Prime Minister commended provincial governments for their decisive action against illegal cigarettes, with additional tax collection from the sector projected to reach Rs40 billion this fiscal year.

For moreย news on real estateย and special reports, visitย Chakor Ventures.

Sources:

CategoriesSpecial Report Construction Economy News Property Taxes Real Estate Real Estate Investment Tax

Pakistan Real Estate Sector Expects Major Tax Relief in Budget FY 2026-27

ISLAMABAD โ€” Pakistanโ€™s real estate and construction sectors are expecting major tax relief in the upcoming federal budget for fiscal year 2026-27, as the government considers proposals to reduce property-related taxes and revive investment activity.

The budget, expected to be presented on June 5, could bring significant changes for property buyers, sellers, investors, and overseas Pakistanis, according to industry representatives and media reports.

Government Signals Possible Relief in Real Estate Taxes

The real estate sector has been under pressure for several years due to higher taxes, rising costs, and a slowdown in property transactions. Industry stakeholders say the sector is directly linked with more than 80 other industries, including cement, steel, paint, glass, electrical fittings, tiles, transport, and construction services.

They argue that when real estate activity slows down, many connected businesses also suffer. For this reason, the sector is urging the government to reduce taxes in the upcoming budget to encourage buying, selling, and construction activity.

Prime Minister Shehbaz Sharif has also reportedly hinted at relief measures for the construction and real estate sectors during meetings with business representatives. These signals have increased expectations that the government may announce major policy changes in the new budget.

Key Tax Demands from the Sector

Real estate stakeholders are demanding reductions in withholding tax, capital gains tax, and rental income tax. They say the current tax structure has discouraged investment and reduced the number of property transactions.

Abolition of Section 7E

One of the sectorโ€™s main demands is the abolition of Section 7E of the Income Tax Ordinance. Section 7E imposes tax on deemed income from immovable property. In simple terms, it allows tax to be charged on an assumed income from property, even if the property owner has not actually earned rent from it.

Industry representatives say this discourages documented investors and creates an unfair burden on property owners. They have also called for property-buying and selling taxes to be reduced to 1%.

Business leader Kashif Chaudhry has said that Pakistanโ€™s economy cannot fully recover without restoring activity in the real estate market. He argued that reducing taxes would increase transactions and ultimately help the government collect more revenue.

FBR Proposals Under Consideration

According to reports, the Federal Board of Revenue has prepared proposals to provide relief to the real estate sector. These proposals include reducing taxes on property purchases and sales, while also making investment easier for overseas Pakistanis and local investors.

Under one reported proposal, withholding tax on property purchases for tax filers could be reduced from 1.5 percent to 0.25 percent. Tax on property sales may also be reduced from 4.5 percent to 1.5 percent.

The government has also reportedly briefed the International Monetary Fund on these proposed tax reductions. This is important because Pakistanโ€™s budget decisions are closely linked with IMF targets on revenue collection and fiscal discipline.

FPCCI Calls for Wider Reform

The Federation of Pakistan Chambers of Commerce and Industry has also supported tax relief for the real estate and construction sectors. FPCCI President Atif Ikram Sheikh has said that taxes imposed under Sections 236C and 236K are expected to be abolished.

He has also called for the removal of Section 7E, describing it as a long-standing demand of the business community.

The FPCCI has further proposed the creation of a Real Estate Regulatory Authority, known as RERA, in Pakistan. The chamber says such an authority would help regulate the sector, improve transparency, and protect investors.

In its shadow budget proposals, FPCCI has suggested reducing real estate taxes to a uniform 0.5 percent. The chamber believes this would encourage investment and help revive economic activity.

Experts Urge Balanced Policy

Tax experts and economists say the government should reduce taxes that discourage transactions, but they also warn that reforms must be carefully designed.

Experts Huzaima Bukhari, Dr. Ikramul Haq, and Abdul Rauf Shakoori have argued that Pakistanโ€™s tax system needs broader reform. They say the country should reduce pressure on productive economic activity while improving taxation of idle and speculative assets.

Their view is that transaction taxes should be rationalized, but the government should also modernize land records, improve property valuation systems, and tax speculative urban land more effectively.

Other analysts have warned that Pakistanโ€™s room for tax relief may be limited because of IMF conditions. If the government reduces taxes in one area, it may need to raise revenue from another area to meet fiscal targets.

Overseas Pakistanis Seen as Key Investors

The proposed relief is also being viewed as important for overseas Pakistanis. Industry representatives say lower taxes and simpler procedures could encourage Pakistanis living abroad to invest more in property and construction projects.

They believe this could bring more foreign exchange into the country through remittances and investment. For Pakistan, where remittances play an important role in supporting the economy, this could be a major benefit.

FPCCI Senior Vice President Saqib Fayyaz Magoon has also said that real estate can help attract more foreign exchange if investors are given confidence and clear rules.

Revenue Challenge for the Government

The government faces a difficult policy choice. On one hand, lower taxes may increase property transactions and revive economic activity. On the other hand, the government must also meet revenue targets and satisfy IMF conditions.

FBR data shows that withholding tax collection increased during the current fiscal year. However, higher taxes have also contributed to a decline in capital gains tax collection compared to the previous year. This shows that while higher rates may increase some tax collections, they can also reduce overall market activity.

Real estate stakeholders argue that lower rates could bring more people into the documented economy and increase tax collection through higher transaction volume.

Budget Could Mark Turning Point

The upcoming budget is being closely watched by builders, developers, property buyers, sellers, and overseas investors. If the government accepts key proposals, the real estate sector could receive one of its biggest relief packages in recent years.

However, experts say tax cuts alone will not be enough. They believe the government must also improve regulation, digitize land records, update property valuation systems, and discourage speculative investment in idle land.

For now, the sector is waiting for the June 5 budget announcement. The final decision will show whether the government is ready to make a major policy shift for real estate and construction, or whether fiscal pressure will limit the scale of relief.

References

Bukhari, H., Haq, I., & Shakoori, A. R. (2026, May 15). Budget 2026โ€“27 & fiscal justice. Business Recorder. https://www.brecorder.com/news/40421212

Bukhari, H., Haq, I., & Shakoori, A. R. (2026). Budget FY27: Out of the box solutions. Business Recorder. https://www.brecorder.com/news/amp/40422269

Federation of Pakistan Chambers of Commerce and Industry (FPCCI). (n.d.). Section 7E of Income Tax Ordinance should be abolished: Atif Ikram Sheikh. FPCCI Official Website. https://fpcci.org.pk/section-7e-of-income-tax-ordinance-should-be-abolished-atif-ikram-sheikh/

Khan, Z. A. (2026, June 1). Real estate sector seeks major tax relief in the budget. SAMAA TV. https://www.samaa.tv/2087351329-real-estate-sector-seeks-major-tax-relief-in-budget

Khyber News. (2026, June 1). Pakistan Federal Budget 2026-27 analysis raises questions over inflation, taxes, and IMF influence. Khyber News. https://khybernews.tv/pakistan-federal-budget-2026-27-analysis-raises-questions-over-inflation-taxes-and-imf-influence/

Pakistan Observer. (2026, June 1). Budget 2026โ€“27: Big relief expected for property buyers, sellers in Pakistan. Pakistan Observer. https://pakobserver.net/budget-2026-27-big-relief-expected-for-property-buyers-sellers-in-pakistan/

Pakistan Observer. (2026). FPCCI unveils Pakistan’s first shadow budget for 2026-27. Pakistan Observer. https://pakobserver.net/fpcci-unveils-paks-first-shadow-budget-for-2026-27/

Siddiqui, S. (2026, June 1). Major tax relief expected for real estate in Budget 26-27. Bloom Pakistan. https://bloompakistan.com/major-tax-relief-expected-for-real-estate-in-budget-26-27/

Talreja, S. (2025, June 11). In Pakistan targets passive incomes, foreign e-commerce in a push for a $50 billion tax haul. Arab News. https://www.arabnews.com/node/2604103/amp

TechJuice. (2026, June 1). Major property tax relief likely in Pakistan Budget 2026-27. TechJuice. https://www.techjuice.pk/major-property-tax-relief-likely-in-pakistan-budget-2026-27/

For moreย news on real estateย and Special Reports, visitย Chakor Ventures.