Property Taxes in Pakistan
Pakistan's property tax regime has undergone significant changes through the Finance Acts of 2022, 2023, and 2024. This guide covers all applicable taxes on property purchase, ownership, rental income, and sale.
§🗂️ Overview of Property Taxes in Pakistan
| Tax | Type | Who Pays | Authority |
|---|---|---|---|
| Capital Gains Tax (CGT) | Federal | Seller | FBR |
| Withholding Tax on Sale (236C) | Federal | Seller | FBR (collected by buyer) |
| Withholding Tax on Purchase (236K) | Federal | Buyer | FBR |
| Stamp Duty | Provincial | Buyer | Province |
| Registration Fee | Provincial | Buyer | Province |
| Urban Immovable Property Tax (UIPT) | Provincial | Owner | Province |
| Capital Value Tax (CVT) | Varies | Buyer | FBR/Province |
| Income Tax on Rental Income | Federal | Owner | FBR |
| Advance Tax on Rental (155) | Federal | Tenant | FBR |
§1. Capital Gains Tax (CGT) on Property
Legal Basis
Section 37 of the Income Tax Ordinance 2001 (as amended by Finance Acts).
Who Pays
The seller is liable for CGT on profit from property sale.
CGT Calculation
CGT = (Sale Price − Cost Price) × Applicable Rate
CGT Rate Table — Immovable Property
| Holding Period | CGT Rate |
|---|---|
| Up to 1 year | 15% |
| 1–2 years | 12.5% |
| 2–3 years | 10% |
| 3–4 years | 7.5% |
| 4–5 years | 5% |
| 5–6 years | 2.5% |
| Over 6 years | 0% (exempt) |
These rates are for tax filers. Non-filers face a flat 15% CGT regardless of holding period. Always verify with FBR for the latest Finance Act changes.
What Is "Cost" for CGT Purposes?
- •Purchase price declared at time of purchase
- •Improvement costs (if documented and verified)
- •Transfer charges paid
- •Legal costs related to acquisition
How to Pay CGT
- •Calculate gain in Income Tax Return (ITR)
- •File return via IRIS portal (iris.fbr.gov.pk)
- •Pay via PSID/challan at designated bank
- •CGT is included in annual income tax assessment
CGT on FBR Valuation
If declared sale price < FBR valuation → FBR uses FBR value for CGT calculation. Under-declaration exposes you to:
- •Tax assessment on actual value
- •Penalty: up to 100% of underpaid tax
- •Prosecution for tax fraud
§2. Withholding Tax on Sale — Section 236C
Who Collects It
The buyer is responsible for withholding 236C from the seller at the time of payment.
Rates
| Seller's Status | Rate |
|---|---|
| Active Tax Filer | 1% of sale value |
| Non-Filer | 2% of sale value |
Withholding applies on full sale consideration, not just the gain.
How It Works
- •Buyer deducts 236C from payment to seller
- •Buyer deposits the deducted tax at FBR via challan (CPR)
- •Seller gets credit for 236C in their annual tax return
- •236C is an advance tax against total income tax liability
Consequence of Not Withholding
The buyer becomes liable for the tax if they fail to withhold. The Sub-Registrar will not register the sale deed without proof of 236C deduction.
§3. Withholding Tax on Purchase — Section 236K
Who Pays
The buyer pays 236K when purchasing property.
Rates
| Buyer's Status | Rate |
|---|---|
| Active Tax Filer | 1% of purchase value |
| Non-Filer | 2% of purchase value |
236K was introduced to document property transactions and bring non-filers into the tax net.
When Does 236K Apply?
- •On purchase of any immovable property valued at PKR 4 million or above
- •Also applies on internal society transfers (DHA, Bahria Town, etc.)
§4. Stamp Duty
Legal Basis
Stamp Act 1899 and provincial stamp schedules.
Rates by Province
| Province | Standard Rate |
|---|---|
| Punjab | 3% of DC rate or sale value (higher) |
| Sindh | 3% |
| KPK | 3% |
| Balochistan | 3% |
| Islamabad (ICT) | 3% |
Valuation Basis
Stamp duty is charged on the higher of:
- •Declared sale price
- •District Collector (DC) rate for the area
DC Rate
Each district's DC office publishes valuation tables by locality. These represent the minimum government-assessed value. Stamps at below-DC rates are not accepted.
Stamp Duty Exemptions
- •Agricultural land transfer between family members (some provinces offer concessional rates)
- •Gift deeds between first-degree family — concessional rates apply
§5. Registration Fee
| Province | Rate |
|---|---|
| Punjab | 1% of declared value |
| Sindh | 1% |
| KPK | 1% |
| Balochistan | 1% |
Plus miscellaneous fees: stamp paper, deed copy charges, etc. (PKR 500–5,000 additional).
§6. Urban Immovable Property Tax (UIPT)
An annual tax on ownership of urban property.
Legal Basis
- •Punjab: Punjab Urban Immovable Property Tax Act 1958
- •Sindh: Sindh Urban Immovable Property Tax Act
Rate
- •Punjab: 5% of Annual Rental Value (ARV)
- •Sindh: 25% of ARV (higher rate, lower ARV assessment)
- •ARV is determined by the Excise & Taxation Department
Who Is Liable
Every owner of urban property is liable. If rented out, the tenant may be assessed but owner is ultimately liable.
Exemptions (Punjab)
| Exemption | Condition |
|---|---|
| Self-occupied residential property | Up to 5 Marla (or up to specified ARV threshold) |
| Properties of specific institutions | Mosques, schools, hospitals (government) |
| Very low ARV properties | Below exemption threshold |
How to Pay UIPT
- •Punjab: Excise & Taxation Department / online at excise.punjab.gov.pk
- •Sindh: Sindh Revenue Board
Unpaid UIPT becomes a charge (lien) on the property. Failure to pay can result in property being auctioned by the government.
§7. Income Tax on Rental Income
If you rent out property, rental income is taxable.
Legal Basis
Section 15 of the Income Tax Ordinance 2001.
Rate (for Individuals — Tax Year 2024–25)
Rental income is taxed at the same progressive rates as other income:
| Annual Rental Income | Tax Rate |
|---|---|
| Up to PKR 600,000 | 0% |
| PKR 600,001 – 1,200,000 | 5% |
| PKR 1,200,001 – 2,400,000 | 15% |
| PKR 2,400,001 – 3,600,000 | 20% |
| PKR 3,600,001 – 6,000,000 | 25% |
| Above PKR 6,000,000 | 35% |
Property owners can claim deductions for: repair/maintenance (1/5 of rent), insurance premium, and mortgage interest.
Section 155 — Withholding on Rent
If a company or firm is the tenant, they must withhold tax on rent paid:
- •15% if property owner is a company
- •Progressive rates if property owner is an individual
§8. Capital Value Tax (CVT)
CVT has been levied and removed multiple times in Pakistan. As of the Finance Act 2023:
- •CVT on immovable property was abolished in 2023 for most transactions
- •CVT on foreign assets was introduced for residents
Always verify current CVT status with FBR or a tax advisor, as this is subject to annual Finance Act changes.
§9. Advance Tax on New Bookings (7E)
Section 7E (introduced 2022) imposes tax on deemed income from capital assets:
- •Treats 5% of fair market value of immovable property as deemed income
- •Tax rate: 20% of deemed income (effectively 1% of property value annually)
- •This applies to all immovable properties not actively used
- •LHC and SHC have issued stay orders challenging 7E — legal status uncertain
7E is highly controversial and legally contested. Consult your tax advisor on whether it applies to you and whether to pay, given ongoing court challenges.
§10. FBR Property Valuation Tables
FBR publishes Property Valuation Tables for major cities under Section 68(4) of the Income Tax Ordinance.
Purpose
- •Sets minimum values for tax calculation
- •Prevents under-declaration of property values
Cities Covered
Lahore, Karachi, Islamabad, Rawalpindi, Faisalabad, Multan, Peshawar, Quetta, Gujranwala, Sialkot, and more.
How to Check FBR Rates
- •Visit FBR Valuation Portal
- •Search by city, area, and street
DC rate (stamp duty) and FBR rate (tax) are different tables. A property has both a DC rate and an FBR rate. Always check both.
§11. Tax on Overseas Pakistani Property
Overseas Pakistanis face specific obligations:
- •Must file income tax return in Pakistan if they own immovable property
- •May be required to pay 236K at 2% rate (non-filer) unless registered in FBR filer directory
- •Overseas Pakistanis can register as overseas filer with FBR for concessional rates
§📊 Complete Tax Summary Table for a Property Sale
Assuming a property sold for PKR 10,000,000 (PKR 1 crore), held for 2 years, by an active filer:
| Tax | Calculation | Amount |
|---|---|---|
| Capital Gains Tax (10% for 2-yr holding) | 10% of gain (assume 3M gain) | PKR 300,000 |
| Withholding Tax 236C (1%) | 1% × 10,000,000 | PKR 100,000 |
| Withholding Tax 236K (buyer, 1%) | 1% × 10,000,000 | PKR 100,000 |
| Stamp Duty (buyer, 3%) | 3% × 10,000,000 | PKR 300,000 |
| Registration Fee (buyer, 1%) | 1% × 10,000,000 | PKR 100,000 |
| Total Tax on Transaction | ~PKR 900,000 |
This is illustrative. Actual amounts depend on DC rate, FBR rate, filer status, and current Finance Act provisions.
§⚠️ Tax Compliance Tips
- •Be an active filer — reduces WHT rates from 2% to 1% (saves significantly on large transactions)
- •Declare actual values — under-declaration risks FBR audit and penalties
- •Keep all receipts — document purchase cost, improvement costs for CGT calculation
- •File annual returns — even if no tax is due, maintaining filer status saves money on transactions
- •Check FBR and DC rates before any transaction
Related: Buying Laws | Selling Laws | General Laws
PPG Legal Team
Pakistan Property Guide