ISLAMABAD: In a significant development, the International Monetary Fund (IMF) has agreed to reduce the withholding tax (WHT) on property purchases by 2% in Pakistan, effective from April 2025. This decision is expected to provide relief to the real estate and construction sectors, which have been facing taxation challenges.
The Federal Board of Revenue (FBR) had requested the IMF to lower WHT rates for both sellers and purchasers. However, the IMF agreed to reduce the WHT rates only for purchasers, while the rates for sellers will remain unchanged. The WHT rates for purchasers currently range from 3% to 4%, depending on the slab.
Additionally, the IMF has agreed to reduce the Federal Excise Duty (FED) on property purchasers from 10% to 9%. The FBR presented data to the IMF, demonstrating the need to reduce transaction costs for property purchasers, who invest significant amounts and face a heavy tax burden.
The IMF has also approved the FBR's request to lower the tax collection target for March 2025 by Rs60 billion, considering the increased number of holidays due to the upcoming Eid ul-Fitr.
Finance Minister Muhammad Aurangzeb expressed optimism about the ongoing negotiations with the IMF, stating that there is no major stumbling block in achieving success and that good news is expected soon.
