The International Monetary Fund (IMF) in principle agrees on a partial reduction in the withholding tax on property purchases at a request from the Federal Board of Revenue (FBR).

However, the new rate, which will be reduced by two percent, will take effect in April 2025. However, the withholding tax rate imposed on property sellers will remain unchanged.

According to sources, a recent virtual meeting between Pakistani officials and the IMF with an agreement to lower the federal tax rate for property buyers. However, the tax on real estate sellers will still be collected at the existing rate.

In addition, the IMF has also accepted a reduction of RS60 billion in the tax revenue target for March 2025, which FBR requested.

The sources indicated that this development would pave the way for consensus on the memorandum of economic and economic policy (MEFP) and an agreement at staff level, which is expected to be completed next week.

With regard to tax reduction on real estate transactions, FBR had previously requested the IMF to lower the withholding tax rates for both buyers and sellers under section 236C and 236. The IMF has, however, only agreed to reduce the tax rate for buyers under section 236 by two percent.

In addition, the IMF has allowed the government to raise PKR 1,257 billion from banks to tackle the circular debt problem in the electricity sector.