TAX ON PROPERTY SALE / PURCHASE AND CAPITAL GAIN TAX 2021
Capital gains
Capital gains on the sale, exchange, or transfer of movable capital assets are taxable.
Capital gains on the sale of immovable property are subject to tax depending upon the amount of gain and holding period
The capital gains worked out as above are subject to tax at the following rates as revised through Finance Act, 2021:
| Gain amount (PKR in millions) | Rate of tax (%) |
| 0 to 5 | 3.5 |
| 5 to 10 | 7.5 |
| 10 to 15 | 10.0 |
| 15 + | 15.0 |
Capital Value Tax
When you purchase any property, you have to give a certain amount of money to the government. According to the Finance Act, 2006, the capital value tax is imposed at the rate of 2% of the recorded value. However, according to the new budget, the total capital value tax for an urban area will be 2% and stamp duty will be 3%. Stamp duty is a certain amount that you pay for the legal documents of the property.
Property that is transferred as a gift, an exchange or relinquishing the rights on a property all come under Capital Value Tax. However, transfer of property between parents, spouse or any of your blood relatives either as a gift or through inheritance have been excluded. In cases where it is a gift or exchange, or where property value is not mentioned in the transaction.
236-C. Advance Tax on sale or transfer of immovable Property.—(1) Any
person responsible for registering 6
[,recording] or attesting transfer of any
immovable property shall at the time of registering 7
[,recording] or attesting the
transfer shall collect from the seller or transferor advance tax at the rate specified
in Division X of Part IV of the First Schedule 8
[:]
[Explanation,—For removal of doubt, it is clarified that the person
responsible for registering, recording or attesting transfer includes person
responsible for registering, recording or attesting transfer for local authority,
housing authority, housing society, co-operative society 2
[, public and private
real estate projects registered/governed under any law, joint ventures,
private commercial concerns] and registrar of properties.
Provided that this sub-section shall not apply to a seller, being the dependant of
a Shaheed belonging to Pakistan Armed Forces or a person who dies while in the
service of the Pakistan Armed Forces or the service of Federal or Provincial
Government, in respect of first sale of immovable property acquired from or allotted by
the Federal Government or Provincial Government or any authority duly certified by the
official allotment authority, and the property acquired or allotted is in recognition of or for
services rendered by the Shaheed or the person who dies in service.
[Provided further that if the seller or transferor is a non-resident individual holding
Pakistan Origin Card (POC) or National ID Card for Overseas Pakistanis (NICOP) or
Computerized National ID Card (CNIC) who had acquired the said immovable property
through a Foreign Currency Value Account (FCVA) or NRP Rupee Value Account
(NRVA) maintained with authorized banks in Pakistan under the foreign exchange
regulations issued by the State Bank of Pakistan, the tax collected under this section
from such persons shall be final discharge of tax liability in lieu of capital gains taxable
under section 37 earned by the seller or transferor from the property so disposed of.
Advance tax under sub-section (1) shall not be collected if the
immovable property is held for a period exceeding 2
[four] years.]
3
[ ]
4
[(4) Sub-section (1) shall not apply to:—
(a) a seller, if the seller is dependent of:
(i) a seller, if the seller is dependent of:
a Shaheed belonging to Pakistan Armed Forces; or
(ii) a person who dies while in the service of the Pakistan
Armed Forces or the Federal and Provincial
Governments; and
(b) to the first sale of immovable property which has been acquired
or allotted as an original allottee, duly certified by the official
allotment authority.
236K. Advance tax on purchase or transfer of immovable property.—(1) Any
person responsible for registering 3
[,recording] or attesting transfer of any
immovable property shall at the time of registering 4
[,recording] or attesting the
transfer shall collect from the purchaser or transferee advance tax at the rate
specified in Division XVIII of Part IV of the First Schedule.
[Explanation,—For removal of doubt, it is clarified that the person
responsible for registering, recording or attesting transfer includes person
responsible for registering, recording or attesting transfer for local authority,
housing authority, housing society, co-operative society 6
[, public and private
real estate projects registered/governed under any law, joint ventures,
private commercial concerns] and registrar of properties.]
(2) The advance tax collected under sub-section (1) shall be adjustable
Provided that if the buyer or transferee is a non-resident individual
holding a Pakistan Origin Card (POC) or National ID Card for Overseas
Pakistanis (NICOP) or Computerized National ID Card (CNIC) who has
acquired the said immovable property through a Foreign Currency Value
Account (FCVA) or NRP Rupee Value Account (NRVA) maintained with
authorized banks in Pakistan under the foreign exchange regulations issued
by the State Bank of Pakistan, the tax collected under this section from such
persons shall be final discharge of tax liability for such buyer or transferee.
[(3) Any person responsible for collecting payments in installments for
purchase or allotment of any immovable property where the transfer is to be
effected after making payment of all installments, shall at the time of collecting
installments collect from the allotee or transferee advance tax at the rate specified
in Division XVIII of Part IV of the First Schedule] 2
Provided that where tax has been collected along with installments,
no further tax under this section shall be collected at the time of transfer of
property in the name of buyer from whom tax has been collected in
installments which is equal to the amount payable in this section.]
(4) Nothing contained in this section shall apply to a scheme introduced
by the Federal Government, or Provincial Government or an Authority established
under a Federal or Provincial law for expatriate Pakistanis 3
[:]
4
[“Provided that the mode of payment by the expatriate Pakistanis in
the said scheme or schemes shall be in the foreign exchange remitted from
outside Pakistan through normal banking channels
