FBR tightens screws on real estate, again
March 2025
Reading Time: 5 minutes
The Federal Board of Revenue (FBR) has presented measures to curb the flow black money into real estate for tax evasion purposes. The measures were presented to the Senate’s Standing Committee on Finance Sub-Committee chaired by Senator Mohsin Aziz. FBR was presenting a slew of wide-ranging measures aimed at targeting different sectors of the economy to raise tax revenue.
With regards to real estate, FBR has recommended that property transactions over Rs. 10 million should be banned if they are being made with undisclosed money. Individuals who wish to purchase high-value properties must now declare their income in income tax returns. As per FBR, only 2.5% of the transactions in the real estate sector exceed Rs. 10 million and it was only targeting these high-value transactions to avoid money laundering. Furthermore, FBR is developing an app to facilitate enforcement of this measure that will display declared income data tied to income tax returns. This will limit an individual’s purchase of property based on their filed returns. To purchase more property, they will need to file declarations for additional income. It remains to be seen whether this measure will generate any actual results or will be just another bureaucratic hurdle to make the life of Pakistani taxpayers harder.
For context, FBR has been assigned a target of Rs. 12.974 trillion for the FY of 2025. This is a historically high target, exceeding the target for FY 2024 of Rs. 8.9 trillion by more than 40%, a massive increase. Consequently, tax collection by FBR is under a microscopic view, particularly since the tax collection target has the IMFs blessing, which has allowed the government to avoid unpopular tax measures such as higher fuel and energy prices to meet the shortfall as of yet. However, this was after a significant number of new tax measures were included in the budget of 2024, amounting to a total of around Rs. 1800 billion, including capital gain taxes on real estate and greater tax penalties for non-filers in many areas, including during real estate transactions.
However, FBR has been having difficulty in meeting its monthly tax collection targets. The result of its efforts are as follows:
| Month | Target | Collection |
| July-2024 | Rs. 985 billion | Rs. 996 billion |
| Aug-2024 | Rs. 898 billion | Rs. 782 billion |
| Sep-2024 | Rs. 1098 billion | Rs. 1106 billion |
| Oct-2024 | Rs. 980 billion | Rs. 878 billion |
| Nov-2024 | Rs. 1003 billion | Rs. 855 billion |
| Dec-2024 | Rs. 1373 billion | Rs. 1326 billion |
| Jan-2025 | Rs. 956 billion | Rs. 872 billion |
| Feb-2025 | Rs. 983 billion | Rs. 850 billion |
All these efforts have resulted in a total tax collection of Rs. 7.665 trillion against a target of Rs. 8.276 trillion, resulting in a shortfall of Rs. 611 billion. The issue of the shortfall has compelled the new director of FBR to seek meetings with the government to find a solution to the problem.
The FBRs proposal for a new mini-budget to introduce new taxes to meet the shortfall was rejected by the Prime Minister. Furthermore, its requests for new vehicles to facilitate revenue officers’ movement was approved along with plans for hiring more auditors but have been scrutinized in the Senate and the media for extravagant spending at a time when public is bearing an inordinately large tax burden. Reportedly, the tax shortfall is due to fall in imports in part, which generated fewer custom duties than expected.
Sources:
https://www.samaa.tv/2087328007-money-laundering-govt-bans-property-purchase-worth-over-rs10m
https://www.dawn.com/news/1886838
https://www.brecorder.com/news/40352911/jul-feb-tax-collection-falls-short-of-target
