Contents
CGT on Property — The Core Rules
CGT = (Selling price − Purchase price) × holding period rate. Applied to the gain only — not the gross sale value.
Applies if property is sold within 1 year of purchase. Falls with each additional year held.
Open plots: 0% CGT after 6 years. Constructed property and apartments: 0% after 4 years.
CGT is the seller's obligation — paid by individuals, AOPs, and companies when a gain is made on the sale of immovable property in Pakistan. The holding period runs from the date of purchase (registration or allotment) to the date of sale. CGT is declared in the annual FBR income tax return via FBR IRIS. Property received by gift or inheritance carries special rules — consult a tax professional.
CGT Rates by Holding Period — 2025-26
The CGT rate you pay depends entirely on how long you held the property before selling. Rates are different for open plots and constructed property:
| Holding Period | Open Plot / Land CGT Rate | Constructed Property / Apartment CGT Rate |
|---|---|---|
| Up to 1 year | 15% | 15% |
| 1 to 2 years | 12.5% | 10% |
| 2 to 3 years | 10% | 7.5% |
| 3 to 4 years | 7.5% | 5% |
| 4 to 5 years | 5% | 0% (Exempt) |
| 5 to 6 years | 2.5% | 0% (Exempt) |
| Above 6 years | 0% (Exempt) | 0% (Exempt) |
CGT rates by year held — open plot (top) vs constructed/apartment (bottom). Green = exempt.
Verify current rates at fbr.gov.pk — CGT rates are subject to Finance Act amendments.
How CGT Is Calculated — Step by Step
CGT is on the profit from selling property — not the full sale price. Here is the calculation method:
Capital Gain = Selling Price − Cost of Acquisition
CGT = Capital Gain × Applicable Holding Period Rate
- Determine the selling price — the amount received or FBR-assessed value, whichever applies.
- Subtract the cost of acquisition — original purchase price at the time of buying.
- The difference is the capital gain. If negative (sold at loss), CGT is zero.
- Identify the holding period — from purchase date to sale date.
- Apply the CGT rate from the holding period table above.
- Declare the gain and CGT in your annual FBR income tax return.
Worked Examples — CGT on Property Pakistan
The following examples show how CGT is calculated on different property types and holding periods.
Example 1 — Open Plot, sold after 2.5 years
Purchase price: Rs. 5,000,000 | Sale price: Rs. 8,000,000
Capital gain = Rs. 8,000,000 − Rs. 5,000,000 = Rs. 3,000,000
Holding period: 2.5 years → CGT rate for open plot = 10%
CGT = 10% × Rs. 3,000,000 = Rs. 300,000
Example 2 — Constructed House, sold after 4.5 years
Purchase price: Rs. 12,000,000 | Sale price: Rs. 18,000,000
Capital gain = Rs. 18,000,000 − Rs. 12,000,000 = Rs. 6,000,000
Holding period: 4.5 years → CGT rate for constructed = 0% (exempt)
CGT = Rs. 0
Example 3 — Apartment, sold after 1.5 years
Purchase price: Rs. 8,000,000 | Sale price: Rs. 9,500,000
Capital gain = Rs. 9,500,000 − Rs. 8,000,000 = Rs. 1,500,000
Holding period: 1.5 years → CGT rate for constructed = 10%
CGT = 10% × Rs. 1,500,000 = Rs. 150,000
| Gain: Rs. 3,000,000 | Property: Open Plot | CGT Rate | CGT Owed |
|---|---|---|
| Sold within 1 year | 15% | Rs. 450,000 |
| Sold after 2 years | 10% | Rs. 300,000 |
| Sold after 4 years | 5% | Rs. 150,000 |
| Sold after 6 years | 0% | Rs. 0 |
CGT vs Section 236C WHT — Two Separate Taxes
Many property sellers confuse CGT with the withholding tax collected at registration. They are two entirely different taxes:
| Feature | Section 236C WHT (Advance Tax) | Capital Gains Tax (CGT) |
|---|---|---|
| When collected | At property registration/transfer | Declared in annual FBR return |
| Basis | Higher of FBR value or DC rate | Actual profit (gain) from sale |
| Active filer rate (TY2026, ≤Rs.50M) | 4.5% | 0%–15% by holding period |
| Non-filer rate (TY2026, ≤Rs.50M) | 11.5% | Same CGT rate — but WHT may be minimum/final tax |
| Nature | Advance tax — adjustable in return | Final tax on capital gain |
| Can offset each other? | Yes — 236C WHT is credited against total tax liability in return | CGT declared separately in return |
Filer vs Non-Filer — CGT Treatment
Section 236C WHT at registration — active filer (green) vs non-filer (red). Source: FBR First Schedule TY2026.
The CGT rate itself (the holding period table) is the same for filers and non-filers. The difference lies in the Section 236C withholding tax collected at the time of sale:
- 236C WHT: 4.5% of consideration at registration (active filer, ≤Rs.50M TY2026). Late filer rate: 7.5%.
- 236C is adjustable — credited in annual return.
- CGT declared in return at holding period rate.
- Excess WHT over CGT may generate refund.
- 236C WHT: 11.5% of consideration at registration (non-filer, ≤Rs.50M TY2026).
- For non-filers, this may be treated as final tax (less flexibility).
- CGT same rate if return is filed.
- Non-filing compounds property tax costs significantly.
How to Reduce Capital Gains Tax Legally in Pakistan
There are several legitimate ways property sellers reduce Capital Gains Tax exposure in Pakistan under the Income Tax Ordinance 2001.
CGT falls as holding period increases. Constructed property becomes fully exempt after 4 years; open plots after 6 years. The difference between selling at 1 year (15%) vs 4 years (5% plot / 0% built) is substantial.
ATL filer status reduces Section 236C withholding tax from 11.5% to 4.5% (≤Rs.50M TY2026) — a saving of up to Rs.700,000 on a Rs.10M sale. Does not change CGT rate, but dramatically reduces advance tax at registration.
Maintain purchase deed, transfer records, and payment evidence to accurately establish acquisition cost. A higher provable cost base means a lower capital gain and less CGT.
Under-declaring property values may trigger FBR reassessment using deemed FBR valuation tables. Accurate declarations protect your gain calculation and avoid penalties.
How to Declare CGT in Your FBR Return
Capital gains from property sales must be declared in your annual income tax return on FBR IRIS:
- Log in to iris.fbr.gov.pk.
- Open the current year income tax return.
- Navigate to the Capital Gains section — typically under "Income from Other Sources" or a dedicated "Capital Gains" tab.
- Enter the property details: purchase date, purchase price, sale date, and sale price.
- IRIS calculates the holding period and applies the correct CGT rate automatically.
- Enter the Section 236C advance tax already paid at registration (from your registration documents).
- IRIS nets the two — any excess WHT is credited against total liability or generates a refund.
Common CGT Mistakes on Property in Pakistan
- Confusing Section 236C WHT (advance tax collected at registration) with CGT — they are two separate taxes.
- Not declaring a property sale in the annual return — CGT is not fully covered by 236C WHT alone.
- Using the sale price as the CGT base instead of the actual profit (gain).
- Not counting the holding period correctly — it starts from purchase date, not allotment date in most cases.
- Assuming all property sales are CGT-exempt after a certain number of years without checking the open plot vs constructed distinction.
- Not adding a newly purchased property to the wealth statement in the same year's return.
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Latest CGT & Property Tax Developments — 2026
Key FBR and legislative changes in 2026 that directly affect Capital Gains Tax on property. All rate information sourced from the Federal Board of Revenue (fbr.gov.pk):
The National Assembly passed the Income Tax Ordinance (Third Amendment) Act 2026, substituting the Alternate Dispute Resolution (ADR) scheme under Section 134A. For CGT disputes — where FBR challenges declared gain values or holding periods — this streamlined ADR process now offers a cleaner resolution path before formal tax litigation. See Section 134A of the Income Tax Ordinance for the official text.
FBR issued SRO 288(I)/2026 on 18 February 2026, publishing a draft substitution of Chapter VIIA of the Income Tax Rules 2002 on electronic invoicing for notified taxpayers. Not yet in force. Property developers and dealers in notified categories should monitor enforcement timelines. Monitor fbr.gov.pk for enforcement timelines.
The First Schedule of the Income Tax Ordinance 2001 prescribes Section 236C TY2026 rates: 4.5% active filer / 7.5% late filer / 11.5% non-filer (≤Rs.50M) as an adjustable/minimum tax against CGT liability. Non-ATL sellers pay ~2.6× more in 236C advance tax — which interacts with CGT declarations in the annual return as described throughout this guide.
FBR property valuations are updated periodically. CGT calculations may be impacted when FBR's deemed valuation of a property exceeds the declared sale price. Always check the current FBR valuation table for your property area at fbr.gov.pk before finalising sale documents.
Official FBR Resources
Frequently Asked Questions
What is the capital gains tax rate on property in Pakistan?
CGT ranges from 15% (held under 1 year) to 0% (open plots held over 6 years, constructed property held over 4 years). CGT is on actual profit — selling price minus purchase price.
How is CGT calculated on property?
CGT = (Sale price − Purchase price) × applicable holding period rate. A plot bought for Rs. 5M and sold for Rs. 8M after 2.5 years generates a Rs. 3M gain. At 10% (2–3 year open plot rate), CGT = Rs. 300,000.
When is property exempt from CGT in Pakistan?
Open plots and land: exempt from CGT after 6 years of ownership. Constructed property and apartments: exempt after 4 years.
What is the difference between CGT and Section 236C WHT?
Section 236C WHT (TY2026: 4.5% active filer / 7.5% late filer / 11.5% non-filer for ≤Rs.50M) is collected at property registration on gross consideration — it is an advance/minimum tax. CGT is declared in the annual return on actual profit at the holding period rate. Both may apply to the same sale.
Is there CGT on property sold at a loss?
No — CGT applies only when there is a positive gain. If the sale price is less than or equal to the purchase price, CGT is zero. The loss may be used to offset other capital gains in the same year.
How do I declare property CGT in my FBR return?
Log in to FBR IRIS, open your return, navigate to the Capital Gains section, and enter purchase date, purchase price, sale date, and sale price. IRIS calculates the holding period and CGT automatically. Also enter any 236C advance tax already paid to credit against liability.
What happens if I sell property before 1 year in Pakistan?
The maximum CGT rate of 15% applies on the actual profit. Section 236C WHT (4.5% active filer / 11.5% non-filer for ≤Rs.50M) is also collected at registration. Selling within 1 year carries the highest combined tax burden — holding longer reduces CGT substantially.
Can CGT be avoided legally in Pakistan?
CGT reaches zero legally once the holding period exemption threshold is met — constructed property after 4 years, open plots after 6 years. Selling at a loss also results in zero CGT. Always consult a qualified tax professional for complex situations.
Is CGT different for plots vs houses in Pakistan?
Yes. Constructed property (houses, apartments) reaches full CGT exemption after 4 years. Open plots require 6 years. The annual reduction rates also differ — a house sold after 4 years pays 0% CGT; the same plot sold after 4 years still pays 5% CGT.
How does FBR calculate property gains?
FBR calculates capital gain as the selling price minus cost of acquisition. If the declared sale price is significantly below FBR's valuation table for that area, FBR may substitute the FBR valuation as the deemed sale price. Always declare accurate values and check fbr.gov.pk for the current FBR valuation of your property area.
How much tax do non-filers pay on property sales?
Non-filers pay Section 236C WHT at 11.5% of gross consideration (≤Rs.50M TY2026) at the time of property registration — compared to 4.5% for active ATL filers. On a Rs.10M sale that is Rs.1,150,000 vs Rs.450,000 — a difference of Rs.700,000. CGT rates are the same for filers and non-filers, but non-filers lose the ability to adjust 236C against their return unless they file.
Summary
Capital Gains Tax on property in Pakistan is progressive and holding-period based — from 15% on quick sales down to 0% for long-term holds. Open plots reach full exemption after 6 years; constructed property after 4 years. CGT is on actual profit, declared in the annual FBR return, and is separate from the Section 236C advance tax collected at registration.
The single best way to reduce property tax costs is to become an ATL filer — reducing sale WHT from 11.5% to 4.5% (TY2026, ≤Rs.50M) — and to hold property long enough to minimise CGT under the holding period exemption schedule.