An Economic Thinktank has strongly recommended the Federal Board of Revenue (FBR) to exempt the construction sector from advance taxes and sales tax in the upcoming budget (2025-26) to ease the burden of transaction taxes on the real estate sector.
In its report titled “Housing and Construction Sector – Challenges and Recommendations”, the Economic Policy & Business Development Thinktank urged the FBR to reduce transaction taxes on buying and selling of immovable properties to address the housing deficit, which now stands at 10 million units and continues to grow.
The report noted that 72 allied industries connected to the real estate sector are currently operating at only 30-40% capacity.
It further recommended simplifying the tax on deemed income under Section 7E of the Income Tax Ordinance 2001 and introducing an expeditious dispute resolution system.
Overall, the Thinktank called for rationalizing the tax regime for the real estate sector in the upcoming federal budget.
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It also stressed the need to develop a comprehensive town planning framework to support sustainable growth.
Terming real estate as a key driver of economic growth, the report highlighted its role in employment generation, addressing housing shortages, and supporting 40-50 allied industries.
The Thinktank observed that although the Real Estate Regulatory Authority (RERA) has been established under the Real Estate Regulatory Authority Act (2020) to regulate the sector in Islamabad, it is still not fully operational.
It called for urgent revival of the Mera Pakistan Mera Ghar scheme to ensure affordable housing access.
Key recommendations include:
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Operationalizing RERA immediately
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Implementing online building approval systems
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Creating digital mortgage platforms
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Developing a centralized property database
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Introducing blockchain-based transparent transactions
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Promoting modular/prefab construction
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Developing green building standards
The report also proposed establishing vocational training institutes in collaboration with NAVTTC and TEVTA, standardizing wage structures, developing safety training protocols, launching retention programs for skilled professionals, and promoting gender-inclusive workforce initiatives.