From Real Estate to Tech: Business Groups’ Budget Priorities

As Pakistan moves closer to announcing its Federal Budget for FY2025–26, a number of business chambers and industry associations have stepped forward with detailed proposals. Their collective aim: to foster economic growth, widen the tax base, and ensure long-term fiscal stability. Key stakeholders—including the Association of Builders and Developers of Pakistan (ABAD), Karachi Chamber of Commerce and Industry (KCCI), Lahore Chamber of Commerce and Industry (LCCI), Islamabad Women’s Chamber of Commerce and Industry (IWCCI), Pakistan Software Houses Association (P@SHA), and Overseas Investors Chamber of Commerce and Industry (OICCI)—have each outlined priorities that reflect their sectors’ aspirations and concerns.

Real Estate and Construction Sector: ABAD’s Recommendations

ABAD is calling for a 15-year, stable tax policy to revive real estate and construction—sectors that power over 60 allied industries. Their key proposals include:

Repeal of Section 7E: Removing the 1% deemed rental income tax on non-rented properties.
Advance Tax Reforms: Abolishing Section 236C and capping Section 236K at 0.5% to lower transaction costs.
Capital Gains Tax Overhaul: Introducing a holding-period-based system to promote long-term investments.
Overseas Investment Incentives: Removing taxes on dollar-based purchases to encourage foreign investment.
Faster Refunds: Fixing FBR’s slow and opaque refund processes.

ABAD believes predictable, long-term tax reforms are critical to rebuilding investor trust and unlocking the full potential of the construction industry.

Broadening the Tax Base: KCCI’s Perspective

KCCI points out a glaring gap between the scale of economic activity and the number of registered taxpayers. Here’s what they’re pushing for:

Targeting Unregistered Businesses: Of 4.6 million commercial and industrial electricity connections, only 396,383 are registered for sales tax—KCCI wants that gap closed.
Smart Data Use: They recommend using electricity, property, vehicle, and bank data to identify non-filers.
Reducing Over-Reliance on Penalties: A broader tax base, they argue, will ease the load on compliant businesses and reduce the need for punitive taxes.

KCCI stresses that such measures are vital if the government wants to hit its Rs14,300 billion tax target for FY2025–26.

Industrial Growth and Tax Reforms: LCCI’s Recommendations

LCCI has suggested a number of reforms to support industrial growth and simplify taxes:

Trader Tax Simplicity: A base fixed tax system that gradually introduces slabs after consultation.
Tariff Overhaul: A cascading tariff structure—0% on raw materials, moderate for semi-finished, and high for finished goods—to aid local manufacturing.
SME Support: Raising the SME turnover threshold from Rs250 million to Rs800 million to match SMEDA’s definition and proposing a simpler tax regime.
Sales Tax Reform: A similar cascading model with 0% on raw materials, 5–8% on intermediates, and 18% on finished goods.

LCCI believes these changes will make it easier to do business and promote industrial growth across the board.

Empowering Women Entrepreneurs: IWCCI’s Appeal

The IWCCI has presented targeted recommendations to make business more accessible for women:

Dedicated Funds: Setting aside resources to support women-led enterprises.
Revenue Threshold Reform: Lowering the Rs50 million corporate registration threshold for women to encourage formalization.

These changes, IWCCI believes, are key to increasing women’s participation in the formal economy and driving inclusive growth.

IT Sector Growth: P@SHA’s Strategic Proposals

To help Pakistan’s IT sector compete globally, P@SHA has recommended the following:

Final Tax Regime Extension: Keeping the 0.25% tax on IT/ITeS exports for another 10 years to ensure stability.
Tax Equity: Addressing the imbalance where local salaried employees pay up to 35%, while remote workers pay just 1%.
Dedicated FBR Commissioners: To handle IT tax issues with better understanding and fewer unwarranted notices.
Double Taxation Relief: Removing the 5% debit card tax from Exporters’ Special Foreign Currency Accounts, which adds to the existing 0.25% tax.
R&D Incentives: A 30% tax deduction for R&D to spur innovation and reduce dependency on imported tech.

P@SHA argues that a consistent and fair tax regime is essential to keeping talent in Pakistan and scaling its digital economy.

Comprehensive Tax Reforms: OICCI’s Vision

OICCI has laid out a broad strategy focused on making taxation simpler, fairer, and more growth-oriented:

Corporate Tax Cuts: Lowering the rate from 28% to 25% in stages, and phasing out the super tax over three years.
Sales Tax Harmonization: Reducing GST on goods from 18% to 15% and aligning provincial taxes to simplify compliance.
Zero-Rating and Excise Reforms: Bringing back zero-rating for pharmaceuticals and reducing FED on drinks—18% for aerated, 15% for juices.
Withholding Tax and Refund Transparency: Cutting withholding tax rates by 20% and publishing monthly refund data.
Expanding the Tax Net: Bringing agriculture, real estate, and wholesale/retail sectors into formal taxation.
Relief for Individual Taxpayers: Removing the 10% surcharge on income over Rs10 million and raising the tax-free income threshold to Rs1.2 million.

OICCI believes these steps would ease the pressure on compliant taxpayers, stimulate investment, and help the government meet its ambitious revenue goals.

Conclusion

Together, these proposals reflect a clear vision from Pakistan’s business community: build a fairer tax system, lighten the burden on those already contributing, and create smart incentives for sectoral growth. As the government prepares its FY2025–26 budget, listening to these voices could lay the groundwork for a stronger, more inclusive economy—one that balances fiscal discipline with long-term development.