Construction Sector and Overseas Pakistanis Set to Gain Big in Upcoming Budget 2025-26

In a significant development for Pakistan’s construction industry and overseas Pakistanis, Prime Minister Shehbaz Sharif has instructed the relevant authorities to introduce a series of major relief measures in the upcoming Budget 2025-26.

Sources within the Federal Board of Revenue (FBR) have confirmed that the measures include abolishing the Federal Excise Duty (FED) on property transactions carried out by overseas Pakistanis. This change will be a substantial relief for the overseas community, who often face significant hurdles when investing in real estate back home.

The proposed reforms go further by eliminating the need for a No Objection Certificate (NOC) from Regional Tax Offices (RTOs), streamlining the process for all property-related transactions. The removal of the FED for all categories of property buyers—3% for filers, 5% for late filers, and 7% for non-filers—is also set to be effective from July 1, 2025.

Another key area of focus in the upcoming budget is the construction sector itself. The government is planning to reduce or entirely scrap withholding taxes on raw materials used in construction. This move is aimed at stimulating activity in the sector and addressing long-standing challenges related to high construction costs.

Sources have indicated that Prime Minister Sharif is closely overseeing these initiatives. His administration is also preparing to register all builders and developers involved in real estate activities starting July 1, 2025. This registration initiative aims to boost transparency and eliminate anonymous (benami) transactions, ensuring that legitimate developers and investors can participate without undue hurdles.

The wider budgetary framework for 2025-26 is expected to see a size of approximately Rs17.68 trillion, a decrease of Rs900 billion from the previous year’s Rs18.7 trillion allocation. One of the main reasons for this decline is the anticipated reduction in interest payments, with a decline in the policy rate expected to save around Rs1,300 billion.

Austerity is expected to be a dominant theme in the budget. Well-placed sources suggest that federal ministries will be prohibited from purchasing new vehicles, while efforts to cut back on electricity and gas usage will be rigorously enforced across all departments.