K-P enacts Finance Act 2025

Law offers relief for small homes, lowers duties, tightens rental rules

PESHAWAR:

Khyber-Pakhtunkhwa governor has signed the Finance Bill 2025, officially enacting it into law. With the governor's assent, the bill has now become effective from July 1, 2025, implementing a series of new tax measures, amendments, and revisions aimed at expanding the province's revenue base.

The new finance law introduces several notable changes, including the expansion of the existing tax net, exemptions for low-income individuals and small properties, and adjustments in various sectors to encourage formalization and compliance. As per the bill, property tax has been waived for houses smaller than five marlas, while professional tax on individuals earning up to Rs36,000 per month has been abolished. Similarly, the stamp duty on the allotment and transfer of residential and commercial properties has been reduced from two per cent to one per cent, aiming to facilitate property transactions and reduce costs for buyers and sellers.

The bill also mandates that all vehicles across the province must now be registered in order to obtain permits, a move expected to streamline transport regulation. In addition, property tax exemptions have been extended to residential and commercial properties up to 4.9 marlas, while electric vehicles have been granted a token tax exemption until June 30, 2028. The hotel bed tax has been reduced from 10 per cent to seven percent. For rickshaw owners, specific penalties have been introduced for violations, and the professional tax on doctors and tailors has been lowered.

The provincial government has asserted that no new taxes have been levied in the former FATA and PATA regions. However, the bill proposes strict penalties for any fraud, forgery, or manipulation of driving licenses, including imprisonment for up to two months or a fine of up to Rs100,000.

Under the revised property tax regime, five to 10 marla houses in divisional headquarters will be taxed up to Rs3,000, and up to Rs2,000 in district headquarters. Properties ranging from 10 to 15 marlas will be subject to Rs3,500 and Rs3,000 in divisional and district headquarters respectively.