23-05-2025
- Business
- Business Recorder
ABAD submits comprehensive budget proposals
KARACHI: The Association of Builders and Developers (ABAD) has submitted a comprehensive budget proposals for fiscal year 2025-26, calling for tax reforms and policy changes to revitalise the construction sector and strengthen the national economy.
According to the ABAD Chairman Muhammad Hassan Bakshi, the organisation's recommendations focus on creating long-term stability through a 15-year tax policy framework, arguing that frequent changes in tax legislation have created market uncertainty that deters investment.
'Constant policy shifts undermine economic stability and discourage long-term planning,' Bakshi said.
'A consistent, predictable tax environment is essential for sustainable economic growth and restoring investor confidence.'
The ABAD through its budget proposals demanded the complete abolition of advance tax under Section 236C, which it said would streamline property transfers and make transactions more efficient. ABAD further said that the tax rate under Section 236K capped at a maximum of 0.5%, down from current levels that Bakshi described as creating an excessive financial burden on buyers and investors.
'The current tax burden on property purchases creates unnecessary barriers,' the chairman explained.
'Reducing Section 236K to 0.5% would significantly ease the financial strain while maintaining transparency in transactions.'
'Under Section 7-E, property owners currently face a 1% tax even when their properties generate no income – a policy ABAD considers fundamentally unfair.' For Section 7-F, the organisation suggested replacing the existing complex system with a simplified per-area tax model similar to Sections 7C and 7D.
The ABAD has identified significant problems with the current capital gains tax framework, noting that unclear rules for taxing property sales create market confusion. The association wants capital gains taxation based on property holding periods, which would provide greater predictability and balance for investors and market participants.
The organisation also criticised the Federal Board of Revenue's refund approval process as slow and lacking transparency. Bakshi argued that removing this requirement would provide immediate relief to the business community while improving overall administrative efficiency.
The chairman highlighted contradictions in property valuation tables used for tax assessments, which create complications during transactions. Resolving these inconsistencies, according to ABAD budget proposals, would establish a fairer and more transparent taxation system across the board.
The ABAD recommended reducing withholding tax rates, projecting that lower rates would actually increase government revenue by stimulating more property transactions. The organisation believed this approach would create a positive cycle of increased activity and higher overall tax collections.
Recognising the crucial role of remittances in Pakistan's economy, ABAD has proposed specific tax relief measures for overseas Pakistanis. Currently, Pakistani expatriates purchasing property with foreign currency still face transfer taxes – a policy the organisation views as counterproductive to encouraging foreign investment.
'When overseas Pakistanis invest their hard-earned foreign currency in Pakistani real estate, they should be encouraged, not penalised,' Bakshi said.
'Removing these tax barriers would boost remittances and strengthen investor confidence among our diaspora community.'
The ABAD chairman positioned these proposals as extending far beyond the construction sector's immediate interests, arguing that implementing these reforms would create ripple effects throughout the economy. He emphasised that the changes would generate employment opportunities and help address Pakistan's ongoing housing crisis.
'These recommendations aren't just about helping builders and developers,' Bakshi said. 'They're about creating a stable economic foundation that benefits all Pakistanis through job creation and improved housing availability.'
Copyright Business Recorder, 2025
