The upcoming federal budget for 2025-26 is shaping up to offer substantial relief to the construction sector and overseas Pakistanis, reflecting a broader strategy to bolster economic activity and encourage remittances into Pakistan’s real estate market.

Prime Minister Shehbaz Sharif has reportedly directed top officials to prioritize these areas. According to information from the Federal Board of Revenue (FBR), overseas Pakistanis will benefit from the elimination of the Federal Excise Duty (FED) on property transactions. This is a particularly significant move that aims to attract investments from the diaspora, which has long played a critical role in Pakistan’s economy.

Moreover, the cumbersome requirement for a No Objection Certificate (NOC) from Regional Tax Offices (RTOs) is set to be scrapped. This reform is expected to streamline processes and reduce the bureaucratic red tape often cited as a barrier to investment.

Starting from July 1, 2025, the government is also proposing to remove the FED for all property purchases. Rates currently stand at 3% for filers, 5% for late filers, and 7% for non-filers, all of which are set to be eliminated to encourage more activity in the real estate sector.

In a bid to further support the construction industry, withholding taxes on raw materials used for construction are also likely to be reduced or completely abolished. These measures collectively aim to rejuvenate the sector, which is seen as a vital driver of economic growth and employment in Pakistan.

Prime Minister Sharif is reportedly paying close attention to these reforms, with additional plans to register all builders and developers from July 1, 2025. This step is expected to enhance transparency and curb the prevalence of anonymous transactions in the real estate market.

Meanwhile, the federal budget for 2025-26 is projected to be around Rs17.68 trillion—approximately Rs900 billion lower than the outgoing fiscal year’s budget. A significant portion of these savings will come from a reduction in interest payments, as the policy rate is forecasted to decline, saving an estimated Rs1,300 billion.

Austerity measures are also expected to feature prominently in the budget. Reports suggest that the purchase of new vehicles for federal ministries will be prohibited, and strict controls on energy consumption will be introduced to reduce costs.