Real Estate & Taxes, Finance Act 2025
July 2025
Reading Time: 5 minutes
The government presented the budget and passed it in June 2025 and now Finance Act 2025 has been made into law. This has several implications for real estate, although it has not met expectations of industry analysts and insiders.
The Finance Act 2025 has finally abolished the FED (Federal Excise Duty). This tax, introduced in 2025, penalized first time property buyers by charging them exorbitant tax rates. The tax, discussed in detail here _________ failed to generate revenue and was finally abolished.
The Finance Act 2025 has also reduced withholding tax rate on property purchases. The details are summarized in the table below:
| Property Transaction Value (Rs) | Tax before Finance Act 2025 for Filers | Tax after Finance Act 2025 for Filers | Tax before Finance Act 2025 for Non- Filers | Tax after Finance Act 2025 for Non-Filers |
| Up to 50 million | 3% | 1.5% | 10.5% | 10% |
| 50-100 million | 3.5% | 2% | 10.5% | 14.5% |
| More than 100 million | 4% | 2.5% | 10.5% | 18.5% |
Similarly, for selling property the Finance Act has increased the withholding tax rate as summarized below:
| Property Transaction Value (Rs) | Tax before Finance Act 2025 for Filers | Tax after Finance Act 2025 for Filers | Tax before Finance Act 2025 for Non- Filers | Tax after Finance Act 2025 for Non-Filers |
| Up to 50 million | 3% | 4.5% | 10.5% | 11.5% |
| 50-100 million | 3.5% | 5% | 10.5% | 11.5% |
| More than 100 million | 4% | 5.5% | 10.5% | 11.5% |
The Finance Act 2025 has introduced one exception to taxation for selling property. To avail the exemption on withholding tax for selling this property, the property must meet the following conditions:
- The property must be in personal use of the seller for the last 15 years.
- The property must be declared by the seller in their wealth statement under Section 116 for the last 15 years.
- The property must be shown as the residence in use in the tax record of the person.
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