Property in Pakistan is taxed at several points: when it is bought, when it is sold, and in some cases while it is simply held. Much of that tax is collected at the registration office before the transfer is recorded. The value used is often FBR’s notified value rather than the price agreed.
The points where tax and accounting rules come into play are numbered.
Numbered points are explained below.
At: Acquire
Tax is taken at the registration office before the transfer is recorded, and it is higher for people not on the Active Taxpayers List. Under section 236C tax is collected from the seller when a transfer is registered, and under section 236K from the buyer; overseas Pakistanis can be charged the filer rate on meeting FBR’s conditions.
We check your ATL and overseas status before the transfer so the right rate can be applied.
At: Rent or develop
The tax can be worked out on a value higher than the price you agreed. FBR notifies property values for cities under section 68, and advance tax and capital gains are generally calculated on the higher of the notified value and the recorded price.
The tables change, so we check the table in force on the date of your transfer.
At: Operate
You can owe tax on a property that earns you nothing. Section 7E treats resident persons as earning a deemed income on certain property they own in Pakistan, with exclusions including one property and business premises used by a person on the Active Taxpayers List.
We check your holdings against the exclusions and include any charge in your return.
At: Sell
How much tax you pay on a sale depends on dates that are fixed once you have bought. Gains on immovable property are taxed under section 37 of the Income Tax Ordinance, and the treatment depends on when the property was acquired and how long it was held.
We work out the gain and how it is reported in your return.
Property gains, deemed income and advance tax paid all go through the annual return and wealth statement.
Overseas Pakistanis buying or selling property need their residency and filer-rate position settled first.
Notices on unexplained property purchases or mismatched values need a documented reply.
Advance tax collected at transfer is generally adjustable against your tax for the year. We confirm how it is treated for your transaction and claim it in your return.
FBR’s notified value applies where it is higher than the recorded price. We check the table for the location and date of your transfer.
Possibly, under section 7E, if it is not covered by one of the exclusions. We check your property holdings against them.