Real Estate Sector of Pakistan Likely to Restore After Budget 2023-2024
The downfall of Pakistan’s real estate sector started back in 2022 when the government changed and the effects were long-term. To put it simply, the real estate sector has not been able to stand back to the position it once was. The government implemented increased taxes and duties on the property and construction sector, which played a huge role in the downfall.
The property sector of Pakistan has been facing challenges for the past 2 years, with a decline in demand and prices. The property prices increased exponentially and buying power of the general public was reduced, causing a fluctuation in the market. However, the recent budget for the fiscal year 2023-2024 has brought some hope for this sector.
In this blog, we will discuss the impact of the recently announced budget on the real estate sector of Pakistan.
Contents
No New Taxes on Real Estate Businesses
Contrary to the previous budgets presented in Pakistan, No new taxes are implemented in Budget 2023-2024 for existing and new real estate businesses. The finance minister announced that there will be no new taxes on real estate businesses. This is indeed good news for the real estate sector, which has been facing challenges for quite some time now.
The government has emphasized the need to generate tax from this sector, amongst other sectors, to promote the economic growth of the country. However, it remains to be seen whether government comes up with a strategy without implementing any new tax on real estate businesses. Furthermore, a tax relief of 10% has been implemented for the real estate sector for 3 years
FBR Tax Exemption for Overseas Pakistanis
The budget for fiscal year 2023-2024 has also brought some good news for Overseas Pakistanis. The Federal Board of Revenue (FBR) has announced exemptions for Overseas Pakistanis to boost foreign investments, specifically in the real estate sector. The government has decided to remove the 2% tax to facilitate Overseas Pakistanis in terms of buying property through remittances.
The government has also suggested the launch of “Diamond Cards” for large-scale investors contributing over $50,000 in the property sectors. Furthermore, the government has included excellent benefits for “Diamond Card” holders.
Extension of Construction Amnesty till 2024
The already implemented construction amnesty scheme will be available for constructors and developers till 2024. The construction and development sector is growing in the country and contributes largely towards economic growth, therefore, the government has announced to provide incentives to developers who are constructing new homes, buildings apartments, and commercial areas.
Relief for the Construction Sector
The construction industry will get 10% relief from the government on business income for the next three years. Moreover, a similar step has also been taken for the induvial who are constructing homes or commercial units, they will also get a 10% for three years. The government has announced a collection of 1.25% tax at 5% turnover for the land developers and the advanced tax will be implemented at 7.5% after the first approval of the layout plan.
Tax Relief for Developers and Building Material Suppliers
The government has tried to reward the developers as well as the building material suppliers. The tax percentage for the import and creation of building materials, furthermore, source of income will not be asked on the construction of personal residences. Similar is the case for developers on the construction of plazas, low-cost housing, and other similar developments. Moreover, no tax will be implemented on the real estate income of developers that is less than or equal to 50 Lacs.
Establishment of Tax-Free Zones in the Country
Finally, the government has also announced to declare tax free zones in different cities in Pakistan. In this effort, Gwadar has been declared the first no-tax industrial and economic tax-free zone of Pakistan. In the future, more areas will be added to this category for the betterment of the economy as well as the general public. This step will also prove to be beneficial for new and emerging businesses and industries.
Conclusion
The budget for the fiscal year 2023-2024 in Pakistan has brought some hope for the real estate sector. The government has announced incentives for builders, such as tax exemptions and reduced duties on construction materials, which is expected to encourage investment in the construction sector and boost the real estate sector.
The government has also emphasized the need to generate equitable tax revenues from real estate, among other sectors, to promote economic growth in Pakistan. The tax exemptions announced by the Federal Board of Revenue (FBR) for overseas Pakistanis are expected to encourage them to invest in the real estate sector of Pakistan.
However, it remains to be seen how these measures will be implemented and their actual impact on the sector. The dynamics of investments in Pakistan real estate are changing, and therefore, investors need to adapt to these changes to make the best real estate investments available in the year 2023 in Pakistan’s real estate sector
Contact Manahil Estate; if you are a local or overseas investor, we have plenty of investment options that will benefit you in the future! Stay connected to stay updated with the latest projects, trends, and developments in the real estate sector of Pakistan!
