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Karachi’s real estate market is undergoing a significant shift as the Federal Board of Revenue (FBR) enforces new tax reforms under the Finance Act 2025, aimed at increasing transparency and curbing tax evasion.
Effective from July 1, the revised policy introduces lower tax rates for property buyers and higher taxes for sellers.
The reform is part of the government’s strategy to encourage genuine ownership and discourage speculative trading, which has often distorted the city’s property market.
These tax adjustments are linked directly to the FBR’s official property valuation tables, used to calculate withholding taxes when declared prices fall below market estimates.
On February 11, 2025, the FBR issued SRO 144(I)/2025, updating the minimum property values across Karachi. These benchmarks ensure that taxes are calculated on realistic prices, even if lower figures are declared on paper.
This move follows an earlier valuation revision on October 29, 2024, under SRO 1724(I)/2024, which redefined property values in 237 localities across Karachi.
The goal was to reduce the common practice of underreporting property prices — a tactic frequently used to avoid paying full taxes.
According to FBR officials, under-declaration has been a major loophole, costing the national exchequer billions annually. The new reforms aim to close this gap, standardize practices, and ensure a level playing field for all stakeholders.
While real estate experts anticipate a short-term slowdown, particularly in speculative areas, the long-term outlook is more optimistic. The reforms are expected to formalize the sector, boost investor confidence, and make Karachi’s property market more transparent and trustworthy.
