Property Sale Taxes — Two Obligations
Advance/minimum tax collected at the time of property registration. Applied on gross consideration. Credited in your annual return. Rates increase at higher value brackets.
Tax on the actual gain (sale price minus purchase price). Declared in annual FBR return. Rate depends on holding period.
Section 236C — Withholding Tax on Property Sale
Section 236C of the Income Tax Ordinance 2001 requires the registering authority to collect advance tax from the seller at the time of property transfer. Key facts:
| Feature | Filer (ATL) | Non-Filer |
|---|---|---|
| Rate (≤Rs.50M) | 4.5% active / 7.5% late filer | 11.5% |
| Applied on | Gross consideration received (TY2026). Rates: 5%/8.5%/11.5% for Rs.50M–100M; 5.5%/9.5%/11.5% above Rs.100M. | |
| When collected | At time of property registration/transfer | |
| Nature | Advance tax — adjustable in return | Treated as advance tax if return filed |
| Can claim refund? | Yes — if excess over total tax | Only if return is filed |
Example: Selling a property with FBR value Rs. 15,000,000
Active filer 236C (Rs.15M, ≤50M bracket, 4.5%): Rs. 675,000 (deducted at registration)
Late filer 236C (7.5%): Rs. 1,125,000
Non-filer 236C (11.5%): Rs. 1,725,000
Active filer saves: Rs. 1,050,000 vs non-filer on Section 236C alone
Capital Gains Tax (CGT) on the Sale
CGT is based on the actual profit from selling the property — not the FBR value. The applicable rate depends on how long the property was held before the sale.
| Holding Period | Open Plot / Land Rate | Constructed / Apartment 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% |
| 5 to 6 years | 2.5% | 0% |
| Above 6 years | 0% | 0% |
CGT = (Sale Price − Purchase Price) × applicable holding period rate
See the complete Capital Gains Tax guide for worked examples and detailed explanation.
How Section 236C and CGT Work Together
This is where most property sellers get confused. Here is the complete picture of how both taxes interact:
- At registration: Section 236C (TY2026: 4.5% active filer / 7.5% late filer / 11.5% non-filer for ≤Rs.50M) is deducted from the seller by the registering authority.
- In your annual return: You declare the property sale — purchase date, purchase price, sale date, sale price.
- IRIS calculates CGT on the actual profit at the applicable holding period rate.
- The 236C advance tax you already paid is credited against your total income tax liability for the year.
- If 236C > CGT: The excess is credited against other tax due — or generates a refund claim if total 236C exceeds all tax owed.
- If CGT > 236C: You pay the difference in your return (net of any refund scenario).
Scenario: Property held 5 years (open plot), CGT rate = 2.5%
FBR value = Rs. 12,000,000
Purchase price = Rs. 6,000,000 | Sale price = Rs. 12,000,000
236C paid at registration (4.5% active filer): Rs. 540,000
Capital gain = Rs. 12,000,000 − Rs. 6,000,000 = Rs. 6,000,000
CGT = 2.5% × Rs. 6,000,000 = Rs. 150,000
236C paid (Rs. 360,000) > CGT owed (Rs. 150,000)
Refund claim: Rs. 210,000 (minus any other tax owed)
Worked Examples — Seller's Total Tax at Different Scenarios
| Scenario | 236C WHT (4.5% active filer on consideration) | CGT on Profit | Net Tax After Credit |
|---|---|---|---|
| Rs. 10M plot, held 1.5 yrs, gain Rs. 2M (12.5% CGT) | Rs. 300,000 | Rs. 250,000 | 236C > CGT → refund Rs. 50,000 |
| Rs. 10M plot, held 8 yrs, gain Rs. 4M (0% CGT) | Rs. 300,000 | Rs. 0 | Refund claim: Rs. 300,000 |
| Rs. 20M apartment, held 4.5 yrs, gain Rs. 5M (0% CGT) | Rs. 600,000 | Rs. 0 | Refund claim: Rs. 600,000 |
| Rs. 15M plot, held 0.5 yrs, gain Rs. 3M (15% CGT) | Rs. 450,000 | Rs. 450,000 | Breakeven — no extra tax or refund |
What Non-Filers Pay on Property Sale
For non-filers, Section 236C is charged at 11.5% (for consideration ≤Rs.50M) — and unless a return is filed, this amount is not adjustable or refundable. It becomes a permanent cost rather than an advance tax credit.
| Property Consideration | Active Filer 236C (4.5%) | Non-Filer 236C (11.5%) | Extra Cost |
|---|---|---|---|
| Rs. 5,000,000 | Rs. 150,000 | Rs. 525,000 | Rs. 375,000 |
| Rs. 10,000,000 | Rs. 300,000 | Rs. 1,050,000 | Rs. 750,000 |
| Rs. 20,000,000 | Rs. 600,000 | Rs. 2,100,000 | Rs. 1,500,000 |
| Rs. 50,000,000 | Rs. 1,500,000 | Rs. 5,250,000 | Rs. 3,750,000 |
How to Declare a Property Sale in Your FBR Return
All property sales must be declared in the annual FBR income tax return regardless of whether CGT is owed. Here is the step-by-step process:
- Log in to iris.fbr.gov.pk.
- Open your annual income tax return for the year the sale occurred.
- Navigate to the Capital Gains section.
- Enter: property type (open plot / constructed / apartment), purchase date, purchase price, sale date, and sale price.
- IRIS calculates the holding period and applies the correct CGT rate.
- In the Advance Tax Paid section, enter the Section 236C amount deducted at registration — this is on your registration documents / challan from the registrar's office.
- IRIS nets your total tax against advance taxes paid. Any refundable excess can be claimed.
- In the Wealth Statement, remove the sold property from your immovable assets.
Claiming a Refund When 236C Exceeds CGT
If your Section 236C withholding tax paid exceeds your actual CGT (especially for long-held property with low or zero CGT rate), you can claim the excess as a refund through FBR IRIS:
- File your annual return declaring the property sale and CGT.
- Enter the 236C advance tax paid in the advance taxes section.
- IRIS computes net tax — if refundable balance exists, mark it as a refund claim.
- FBR processes refund claims — timelines vary; follow up via FBR's helpline or your RTO.
- Refunds are generally deposited to your registered bank account on IRIS.
Common Mistakes When Selling Property in Pakistan
- Not filing a return after a property sale — missing CGT declaration and losing any 236C refund.
- Treating Section 236C as the final total tax and not filing — CGT is separate and declared in the return.
- Not declaring the property removal from the wealth statement after sale.
- Not keeping the 236C challan from the registration office — needed for the advance tax credit in the return.
- Completing the sale as a non-filer when ATL registration was available — paying 11.5% (non-filer) instead of 4.5% (active filer) under TY2026 rates.
- Not knowing about the refund opportunity on long-held property with zero CGT rate — leaving a large refund unclaimed.
Related Property Tax Guides
Useful Tax Tools & Guides
Plan income tax alongside property gains.
SlabsFBR Tax Slabs 2025-26Income tax rates for property gains in returns.
CGTCapital Gains Tax GuideCGT rates, holding periods, and examples.
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VerifyNTN VerificationConfirm ATL filer status before registration day.
StatusFiler vs Non-FilerFinancial impact of ATL status on property.
2026 Regulatory Updates Affecting Property Sellers
Critical developments from KPMG Pakistan in early 2026 that every property seller should factor into their planning:
KPMG Pakistan's WHT Rate Card for Tax Year 2026 confirms updated Section 236C (seller WHT) TY2026 rates: 4.5% for active ATL filers (≤Rs.50M), 7.5% for late filers, and 11.5% for non-filers. This advance tax is collected at registration and credited against the seller's total annual income tax liability, with CGT declared in the annual return.
The Income Tax Ordinance (Third Amendment) Act 2026 passed by the National Assembly streamlines the ADR mechanism under Section 134A. Sellers who disagree with FBR's CGT assessment — for example, a dispute over the declared gain or holding period — now have a cleaner ADR pathway before full tax tribunal proceedings. Read the full KPMG brief on the Third Amendment Act 2026.
FBR's draft e-invoicing rules (SRO 288(I)/2026, February 18, 2026) under Chapter VIIA of the Income Tax Rules 2002 are not yet in force — but property developers and real estate businesses selling multiple units should begin monitoring FBR's enforcement timeline. Once finalised, failure to comply with e-invoicing requirements will attract penalties. Full KPMG Tax Alert here.
For property sold at low or zero CGT (long-held property), the Section 236C advance tax paid may significantly exceed the CGT owed. The streamlined ADR mechanism and stronger FBR IRIS refund processing in 2026 make it more practical than ever to file your return and claim this refund. File by September 30, 2026 for Tax Year 2026.
Official FBR Resources
Frequently Asked Questions
What is the tax on selling property in Pakistan?
Two taxes: Section 236C WHT (TY2026: 4.5% active filer / 7.5% late filer / 11.5% non-filer for ≤Rs.50M) collected at registration on FBR/DC value, and CGT on actual profit (0%–15% by holding period) declared in the annual FBR return.
Do I pay both 236C and CGT on the same property sale?
Both may apply, but they work together. 236C is an advance tax credited against your total tax liability. If 236C exceeds CGT, you may claim a refund through your annual return.
Can I get a refund on Section 236C tax paid?
Yes — if 236C paid exceeds your total tax owed (including CGT), file a return claiming the excess as a refund. Common for long-held property with low or zero CGT rates.
What is the CGT rate on selling property after 5 years?
Open plots held 5–6 years: 2.5% CGT on profit. Constructed property and apartments held over 4 years: 0% — fully exempt.
Do I need to declare a property sale in my FBR return?
Yes — mandatory. Declare in the Capital Gains section and remove the property from your wealth statement. Filing the return is also the only way to credit 236C advance tax and claim any refund.
What if I sell property I received as a gift or inheritance?
Section 236C WHT applies at the time of sale regardless of how property was acquired. CGT may apply on gains from the date of inheritance/gift to the sale date. Consult a tax professional for specific gift or inheritance situations.
Summary
Selling property in Pakistan triggers two taxes: Section 236C WHT (TY2026: 4.5% active filer / 11.5% non-filer for ≤Rs.50M) collected at registration on gross consideration, and CGT on actual profit (0%–15%) declared in the annual return. The 236C advance tax is credited against total tax — excess becomes a refund claim.
File your return after every property sale — to declare CGT, credit 236C advance tax, remove the property from your wealth statement, and claim any available refund. For long-held property with zero or low CGT, the refund can be substantial.