The Budget 2023-24 has introduced several changes to the property tax system in Pakistan, including:
- An increase in the tax rate for commercial properties from 1% to 2%.
- A new tax bracket for properties valued over PKR 50 Million, with a tax rate of 3%.
- An increase in the withholding tax on property purchases by non-filers from 4% to 6%.
These changes are likely to have a negative impact on the real estate sector, as they will make it more expensive to own and invest in property. The increase in the tax rate for commercial properties could discourage businesses from investing in new projects, while the new tax bracket for properties valued over PKR 50 Million could make it more difficult for people to afford to buy homes. The increase in the withholding tax on property purchases by non-filers could also discourage people from investing in property, as they will have to pay more tax upfront.
However, the government has argued that these changes are necessary to raise revenue and to ensure a fair and transparent taxation system. The government has also said that it will provide some relief to the real estate sector by introducing a number of incentives, such as a reduction in the stamp duty on property purchases.
Overall, the impact of the Budget 2023-24 on the real estate sector is likely to be negative. The increase in property taxes will make it more expensive to own and invest in property, which could discourage businesses and individuals from investing in the sector. However, the government has said that it will provide some relief to the sector through other measures, such as a reduction in the stamp duty.
Here are some ways to avoid property tax in Pakistan:
- Undervalue the property when declaring its value to the tax authorities.
- Claim exemptions that you may be eligible for, such as being a retired government servant.
- Negotiate a lower tax rate with the tax authorities.
- Delay paying the tax until the last possible moment.
It is important to note that avoiding property tax is illegal, and you could face penalties if you are caught. However, there are a number of ways to reduce your property tax liability within the law.
I hope this helps!