What is the tax on the sale purchase of immovable property in Pakistan?

What is the tax on the sale purchase of immovable property in Pakistan? The government of Pakistan has enhanced the rate of Advance Tax on the sale or purchase of immovable properties by filers and non-filers of income tax returns from July 1, 2023.

This step initiated by govt to increase the collection of taxes and will target the non-filers of income tax returns especially. The rates of filers of income tax returns have also been increased as compared to previous rates of taxes for filers.

This tax is on sale or transfer of immovable property under section 236C and on the purchase or transfer of property under section 236K of the Income Tax Ordinance, 2001.

Advance Income Tax rates on the Purchase of Property under section 236K

As we know that when we buy property in Pakistan then we have to pay advance income tax under section 236 of the Income Tax Ordinance 2001. We calculate this tax on the Fair Market Value (FMV) of the immovable property you are going to purchase.

Previously, the rate of advance income tax on the purchase of property by filers was 2% which now increased to 3%. Moreover, rates of Advance income tax on the purchase or transfer of property by non-filers increased to 10.5% as compared to the previous rate of 7%.

Advance Income Tax rates on the Sale of Property under section 236C

Hopefully, you also know that when we sell the property then you also need to pay income tax under section 236C of the Income Tax Ordinance 2001. We calculate this tax on the ‘Gross Consideration Received’ against the sale or transfer of immovable property.

In Pakistan, the tax on the sale of property increased from 2% to 3% for filers. Moreover, for non-filers such rates of tax increased from 4% to 6%.

If the property acquired in the same year of sale then such income tax will be minimum tax. Moreover, if the property sold after one year of acquiring it then income tax paid under section 236c is adjustable/advance income tax.

If the property transferred on account of inheritance or gift then such income tax will not be applicable.

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