Income tax from Pakistan’s real estate sector has fallen sharply in the first two months of the fiscal year.
Collections stood at Rs28 billion in July and August, down 29 percent from Rs39.4 billion in the same period last year. That is Rs11.2 billion less, even though more property deals were expected.
The drop follows last budget’s 50 percent cut in advance tax on buying and selling immovable property.
What the Latest Numbers Show
The salaried class paid Rs91 billion in income tax over the same two months.
That is Rs6.3 billion, or 7.5 percent, higher than a year earlier. It is also 225 percent more than the real estate sector paid.
On sales of property, advance tax fell from Rs27 billion to Rs18.4 billion, a 32 percent decline. On purchases, it slipped from Rs12.4 billion to Rs9.7 billion, down 22 percent.
Wholesalers and retailers also paid a little less. Their combined withholding taxes came to Rs12 billion, about Rs440 million or 3.5 percent below last year.
Salaried workers still paid Rs79 billion more than that retail group — a gap of 658 percent.
Why Property Collections Collapsed
In the budget, three tax slabs on property sales were merged into a single 2.75 percent rate. The old top rate was 5.5 percent.
The rate on purchases was cut from 2.5 percent to 1.25 percent.
Those changes were presented as a boost for Pakistan’s housing and real estate market. Early realty tax collection data suggests the revenue cost arrived first.
The government also gave salaried people about Rs52 billion in relief. Rates fell by up to 3 percent, a 9 percent surcharge was abolished, and the 35 percent slab now starts at Rs7 million a year instead of Rs4.1 million.
Even after that relief, payroll taxes kept rising. Property taxes did not.
A Growing Fairness Question
The contrast between the salaried class tax and property sector collections is hard to miss.
People on salaries cannot easily hide income. Tax is deducted at source. Property transactions, by design, now carry a much lighter advance-tax load.
That difference raises a broader question about the distribution of the tax burden. The latest FBR July August collection figures show that salaried workers are contributing substantially more than the property sector, despite the relief provided to payroll taxpayers.
Those same salaried households also face higher fuel costs. The government is passing through international oil prices, charging an Rs80 per litre petroleum levy and a Rs5 climate levy.Food prices have followed.
So the group that already pays more on paper is also absorbing more at the pump and the grocer.
FBR’s Broader Picture
The Federal Board of Revenue missed its August target by Rs27 billion. Growth was almost flat.
Last fiscal year, FBR collected Rs13.01 trillion, up about 11 percent. Nominal GDP grew 10.8 percent. The tax-to-GDP ratio stayed stuck at 10.3 percent.
Additional measures worth Rs312 billion were imposed in June 2025. Their full effect is not yet visible in the early-year numbers.
Claims that enforcement alone brought in Rs800 billion last year have not been independently verified. If that extra haul had truly sat on top of normal growth and new taxes, last year’s collection would have been closer to Rs13.8 trillion. It was not.
Tax Cuts Have Shifted the Early Revenue Picture
The latest real estate income tax FBR figures show how quickly a change in advance tax rates can affect government collections.
The 50 percent cut in advance tax on property transactions was intended to encourage activity in the real estate market. Instead, the first two months have produced a sharp fall in withholding tax from property sales and purchases.
Sales-related collections declined 32 percent, while purchase-related collections fell 22 percent.
Whether increased transaction volumes eventually compensate for the lower rates remains to be seen. For now, the immediate impact is a smaller contribution from the property sector to the tax base.
Digitisation Has Not Closed the Gap
Digitisation and tighter monitoring have changed how FBR works. They have not yet closed the gap between a taxed salary and a lightly taxed property deal.
The issue is not simply whether one sector pays more in a particular month. It is also about how different forms of income and transactions are treated within the broader tax system.
Two months is a short window. But the first signal is clear: the property tax cut is showing up in the cash register, and the salaried class is still carrying a heavier share.
What the Early Numbers Mean
The 29 percent fall in realty tax collection highlights the immediate revenue impact of the property tax rate cut in the new fiscal year.
At Rs28 billion, real estate income tax collections were well below the Rs39.4 billion recorded a year earlier. Meanwhile, salaried workers contributed Rs91 billion, maintaining a much larger share of income-tax receipts.
The coming months will show whether stronger property-market activity can reverse the decline or whether the lower advance-tax rates will continue to widen the collection gap.
For now, the numbers tell a straightforward story: Pakistan’s salaried class is still paying substantially more into the tax system, while property-related collections have moved sharply lower.