ISLAMABAD: Prime Minister Shehbaz Sharif has instructed authorities to introduce sweeping relief measures for the construction sector in the upcoming Budget 2025-26.
Key proposals under consideration include the abolition of the Federal Excise Duty (FED) on property transactions for overseas Pakistanis and the elimination of the requirement for a No Objection Certificate (NOC) from Regional Tax Offices (RTOs).
Additionally, the FED on property purchases across all categories—currently set at 3% for filers, 5% for late filers, and 7% for non-filers—is expected to be removed starting July 1, 2025.
The government is also considering reducing or eliminating withholding taxes on raw materials used in construction and on property transactions, in a bid to stimulate investment in the sector.
According to FBR sources, Prime Minister Shehbaz has taken a personal interest in addressing long-standing hurdles facing the real estate and construction industries. Starting July 1, 2025, the government also plans to register all builders and developers, aiming to improve transparency and completely eliminate benami (anonymous) transactions.
Budget Outlook: Austerity and Efficiency
The federal budget for 2025-26 is expected to be unveiled on June 10 and will likely total around Rs17.68 trillion, nearly Rs900 billion less than the current year’s budget of Rs18.7 trillion, signaling a focus on fiscal restraint.
A sharp decline in the policy rate is projected to cut loan and interest-related expenses by approximately Rs1,300 billion, easing pressure on public finances.
As part of broader austerity measures, the budget will include a ban on the purchase of new vehicles for federal ministries and departments. Ministries will also be instructed to curb electricity and gas consumption as part of the government’s drive to reduce wasteful spending.
The combination of tax incentives for the construction sector and aggressive cost-cutting in government operations reflects the administration’s dual focus on economic revival and fiscal discipline.
