The federal government is also examining tax relief measures for the real estate industry in the next Budget 2026-27. Proposed cuts in transaction taxes on property purchase and sales for tax payers are being evaluated.

Official sources said the budget may also decrease transaction taxes imposed on taxpayers involved in property transfers. The suggested reforms are intended at providing relief to the real estate sector and promoting verifiable economic activity.

The withholding tax on property transactions under section 236K could be decreased from 1.5 per cent to 0.25 per cent, sources in the Finance Ministry indicated. The suggested cut is being discussed as part of broader moves to alleviate the tax burden on property buyers.

The withholding tax under section 236C on the sale of property can also be reduced in a similar way. The existing rate of 4.5 percent is likely to be reduced to 1.5 percent under the proposed budget measures.

Sources at the Federal Board of Revenue (FBR) said the International Monetary Fund (IMF) has been told about the proposed changes in the taxes on property sector.

But the non-filers are not expected to get any relief in the 2019 budget. Sources said non-filers presently pay a combined 10.5 percent on property purchases and transactions, and the rates are likely to remain constant.

Officials said the collection of withholding tax rose by 29 percent during the current fiscal year from July to March over the same time of the previous year. Sources said that despite the increase in revenue from withholding tax, revenue from gain tax dipped from the previous fiscal year due to the impact of greater taxing on property transactions.

The reforms are expected to be finalised as part of the release of the federal budget for the next fiscal year.

Pakistan Stock Exchange (PSX) kicks-off new business week on sour note as Middle East tensions increase.

In opening session, KSE-100 index tumbled 855.34 points to hit 173,107.47 points, indicating negative change of 0.49 percent compared to previous finish of 173,962.81.

Oil prices jumped more than 2 percent in the meanwhile as Iran and the US exchanged strikes and Israel authorised soldiers to push farther into Lebanon in the fight with the Tehran-backed Hezbollah militant group.

U.S. oil futures increased $2.29, or 2.62%, to $89.65 a barrel at 0436 GMT. Brent futures gained $2.05 or 2.25% to $93.17 a barrel.

The stepped-up fighting, coming just after the U.S. hosted Israel-Lebanon peace talks in Washington on Friday, clouded expectations that the U.S. and Iran could soon announce an extension to their ceasefire agreement, which had pushed Brent and WTI to settle down 1.8% and 1.7% respectively on Friday.

Sources said the federal budget for FY2026-27 was likely to be around Rs18 trillion. Most of the financial issues have been discussed and settled but the virtual negotiations between the Federal Board of Revenue (FBR) and the International Monetary Fund (IMF) are apparently ongoing on ideas to provide relief to the salaried class.

The IMF has agreed to cut the FBR’s tax collection target for the current fiscal year for the second time, sources said.

The revised objective has been decreased to Rs13.005 trillion from Rs13.979 trillion, according to reports. The government is likely to fix a total tax collection target of around Rs15.264 trillion for the next financial year.

The proposed revenue break-up is Rs7.413 trillion from direct taxes, Rs4.727 trillion from sales tax, Rs1.651 trillion from customs duties and Rs1.043 trillion through Federal Excise Duty.

IMF asks Pakistan to broaden tax net, boost revenue collection
Meanwhile, the Petroleum Development Levy (PDL) is projected to continue to be a major source of government revenue. Sources said the target for PDL collections could be boosted to Rs1.727 trillion in the next fiscal year as against Rs1.468 trillion for this year.

Non-tax revenue is likely to be around Rs2,768 billion while petrol surcharge receipts are estimated at roughly Rs151 billion.

On the spending side, debt servicing will probably remain the major budgetary burden on the federal government. Total interest and debt servicing payments are anticipated to be Rs7.824 trillion. Of that, Rs6.652 trillion is for domestic debt and Rs1.107 trillion for foreign debt servicing.

Sources also say the forthcoming budget may propose new taxing measures of around Rs220 billion to help achieve budgetary targets set with the IMF.

Besides, changes in income tax brackets for salaried people are also allegedly on the cards. The government is looking at ways to provide some assistance to taxpayers in the formal sector.

The federal budget will be delivered in the next several days, providing further insight into taxation, spending objectives and economic strategy for the new financial year.