Pakistan Plans Major Hike in Real Estate Tax in Budget 2025–26

The Pakistani government is planning a significant increase in real estate tax through the upcoming 2025–26 federal budget. According to official sources, the capital gains tax (CGT) on real estate sales may be raised from 15% to as high as 35%, aligning the real estate tax structure more closely with corporate sector taxation.

This proposed tax reform surfaced during virtual meetings between Pakistan and the International Monetary Fund (IMF), focusing on fiscal improvements. The government seeks to raise the tax-to-GDP ratio to 11% in the next fiscal year, with tax adjustments positioned as a key driver of additional revenue.

Currently, Pakistan’s real estate sector contributes relatively little in taxes. To address this, the government is reportedly drafting tax proposals worth PKR 400 billion, including the aggressive revision of  tax rates. Notably, this increase in capital gains tax will not impact income derived from stock market shares.

Prime Minister Shehbaz Sharif has emphasized the need to widen the tax base and has instructed authorities to crack down on tax evasion. He also warned government officials facilitating such evasion that accountability measures will be enforced. These steps underline the government’s intent to meet Federal Board of Revenue (FBR) targets and enforce stronger real estate tax compliance.