South Korea on Monday unveiled comprehensive measures to boost domestic demand as the domestic economy was faltering due to sluggish exports stemming from the prolonged European fiscal crisis and the consequent global economic slowdown.

"Uncertainties over the global economy widened amid emerging political instability in Europe from the second quarter. The government made efforts to fine-tune the existing stimulus measures, but the protracted European fiscal crisis and the global economic slump caused the delayed recovery of our economy," Finance Minister Bahk Jae-wan said in a meeting for revitalizing the economy.

The delayed domestic recovery arising mainly from worsening external conditions raised the need to vitalize housing transactions, private consumption and corporate investment, the minister said.

South Korea's real gross domestic production (GDP) growth was revised down to 0.3 percent from a preliminary figure of 0.4 percent in the second quarter on an on-quarter basis. Exports slowed down on worsening external conditions, leading to the weakening of domestic demand.

In a bid to boost the flagging real estate market, the finance ministry planned to exempt the capital gains tax over the next five years for those who buy unsold housing within this year as part of efforts to boost the flagging real estate market. The housing acquisition tax will also be halved to 1.2 percent by the year-end.The nation's housing transactions slowed to an average of 401, 000 for the first seven months, down 30.2 percent from the same period of last year. The figure was the lowest since the data started being complied in 2006.

The withholding tax for earned income will be rationalized by adjusting the tax rate closer to real income. South Korean workers have paid more earned income taxes every month, taking refund of the overpaid taxes later.

The ministry expected the adjusted rate to lower the monthly withholding tax rate by around 10 percent on average, helping boost the private consumption.

The individual consumption tax rates for automobiles and large- sized home appliances will be cut temporarily by 1.5 percentage points until the end of this year, according to the ministry.

In addition, the ministry planned to encourage social overhead capital (SOC) funds to implement its investment plan in advance by helping them finance their operation, while widening its financial support for small-sized firms and venture companies.