The Government of Pakistan and the International Monetary Fund have reportedly reached an agreement on key economic targets and a special relief package for the real estate sector in the Federal Budget 2026-27. The development is expected to provide a significant boost to Pakistan’s property and construction industries, which have faced challenges in recent years.
According to sources, Finance Minister Muhammad Aurangzeb is expected to announce substantial reductions in withholding tax rates during his budget speech. In addition, tax relief measures for salaried employees are also likely to be included in the upcoming budget proposals.
Sources familiar with the negotiations said the IMF initially expressed concerns about reducing taxes on property transactions due to the potential impact on government revenue. However, after several rounds of discussions and consultations, both sides reportedly reached a consensus on the proposed measures.
Government officials argue that rising transaction costs, increasing construction expenses, and a slowdown in the property market have placed considerable pressure on the real estate and construction sectors. They believe tax reductions could help revive market activity and encourage new investment.
Under the proposed measures, withholding tax on the purchase of immovable property for tax filers under Section 236 of the Income Tax Ordinance may be reduced from 1.5% to 0.25%. Similarly, withholding tax on property sales under Section 236-C for filers is expected to be lowered from 4.5% to 1.5%.
Officials believe that lower transaction taxes will stimulate property buying and selling activity, accelerate construction projects, and support related industries such as cement, steel, paint, transportation, and financial services. The government also expects the measures to attract greater investment from overseas Pakistanis in the domestic property market.
Final details of the proposed tax relief package will be revealed in the Budget 2026-27 documents. It remains unclear whether the concessions will apply only to active tax filers or will also extend to late filers and non-filers. Alongside real estate incentives, the government is also expected to announce tax and duty relief measures under an export-focused strategy aimed at boosting exports and strengthening economic growth.
