The federal government is weighing a significant hike in the capital gains tax (CGT) on real estate transactions, with plans to raise the rate from 15 percent to 35 percent in the upcoming 2025–26 budget.

The proposal, which surfaced during recent virtual discussions with the International Monetary Fund (IMF), aims to bring property taxation in line with corporate tax rates and boost revenue collection from Pakistan’s traditionally under-taxed real estate sector. Notably, the proposed CGT increase would not affect gains from stock market shares.

The government’s broader fiscal strategy includes a target tax-to-GDP ratio of 11 percent for the next financial year, alongside the introduction of Rs. 400 billion in new tax measures. Real estate is expected to be a major focus of these efforts.

Prime Minister Shehbaz Sharif has directed authorities to crack down on tax evasion and the officials who enable it, while commending the economic team for making progress toward the Federal Board of Revenue’s (FBR) revenue targets for the current fiscal year.