Prime Minister Shehbaz Sharif has delayed a decision on a tax incentive package aimed at reviving the real estate sector. The main points of debate were whether to provide subsidies to boost construction and whether to allow an amnesty for disclosing the source of income.

Tax authorities once again opposed a proposal from a businessman to grant an amnesty of up to Rs50 million for first-time buyers of homes, shops, or offices. The opposition stems from the International Monetary Fund’s (IMF) ban on tax amnesties.

A task force on housing met with the prime minister on Friday and presented recommendations to reduce property transaction taxes and abolish the federal excise duty. Currently, even taxpayers (filers) pay around 8% in taxes when purchasing property.

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While there was general agreement on lowering taxes, no final decision was made on key issues. FBR Chairman Rashid Langrial supported eliminating the 3% federal excise duty, arguing that it was an unjustified tax that had already been challenged in courts. He pointed out that the FBR was demanding this duty on previously built homes that were resold multiple times, which was beyond legal scope.

The prime minister assigned Minister for Economic Affairs Ahad Khan Cheema to refine the package and consult with the IMF before making any final decisions.

Discussions in the meeting focused on reducing taxes on buying and selling property, abolishing the federal excise duty, providing interest-rate subsidies for home construction loans, and deciding whether to grant a Rs50 million amnesty for first-time buyers without requiring proof of income.

Some task force members raised concerns that such incentives could lead to excessive investment in real estate, fueling speculation instead of genuine growth.

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Leading businessman Arif Habib suggested that first-time homebuyers should be exempt from disclosing the source of up to Rs50 million. However, FBR Chairman Rashid Langrial rejected the idea, arguing that it would amount to a tax amnesty, which the IMF would not support.

Arif Habib explained that Pakistan’s informal, cash-based economy discourages banks and corporations from investing in large-scale construction projects. He emphasized that his proposal should not be considered an amnesty since it was limited to first-time, genuine buyers.