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Property Tax in Pakistan

What is a Property tax?

Tax is what makes the country going! The tax is the amount used for the welfare of the citizens. So, are you paying your taxes?

If you want the economy and country to stabilize all you need to do to contribute is to start paying your taxes timely!

Being a responsible citizen, we must pay taxes timely. The paid tax ensures our economic stability. Most people hide their properties in order not to pay tax, which is quite wrong. The property is assets of your country, and while you obtain it, you are required to pay the tax honestly. The tax, in return, is utilized for the well-being of the country.

property tax in pakistan 2018-19

What is a Property Tax?

The property tax is the amount in the form of money that an owner has to pay. The tax is paid to the government. The taxes help the government to function financially. The amount is utilized in various areas, i.e.: It is used to build infrastructure, increase the required imports, and pay the salaries of people, etc.

The term property doesn’t only refer to plots or home but every material thing that one owns. The tangible assists include your car, your farm, your office building, and other items on your name. The current tax percent is Pakistan as of 2020 is 25%.

Although acquire such materialistic things is expensive, i.e., building your home, the cost of raw material, the labor, the interior, the flooring, and others. Many banks in Pakistan are providing home loans so you can build your home with ease.

Property Tax and Our Country

If we want to see, Pakistan flourishes and step forward among the third world countries. We need to take action now. The property tax is not the same for everyone because the more you earn, the more you have to pay tax. It keeps a balance between the different status class of society. The property tax also varies from city to city. The taxes are in a format, so each person pays them with ease.

Several people don’t pay the taxes, which results in not such good financial conditions. The government doesn’t get enough money to pay the salaries, formulate the healthcare, education, and security. Due to such conditions, the government has gone for external sources. This includes taking loans from the International Monetary Fund (IMF) and other countries on the high-interest rate.

Tax Year of Pakistan

The tax year starts from 1 July to 30 June of next year, i.e., The property tax, which starts from 1 July 2020, will end on 30 June 2021. For deep insights, one can refer to real estate books. The books give an insight into the commercial property as well as residential property.

Do you know the types of Property Taxes in Pakistan?

Capital Value Tax

As per the Finance Act 2006, the person who buys any property will have to pay Capital Tax Value. It is 2% of the total recorded amount. The amount is paid to the government while buying the property. The documentation of the property also has the capital Value Tax. It is 3% of all the legal documentation called ‘Stamp Duty.’

Capital Gains Tax

The Capital Gain Tax is a sibling to Capital Value Tax. It is the amount that the seller has to pay to the government. The amount is paid at the time of selling the property. The tax applies to the property of the sellers. The tax chart changes every year. After three years, the seller is obliged to pay the Capital gain tax. Whereas the first-year tax is 10%, the second year it comes down to 7.5%, and in the third year, it’s 5% only.

property tax pakistan

Withholding Tax

The withholding tax is a fusion of Capital Gain Tax and Capital Value Tax. It is the amount which is paid by both the buyer and the seller. It is paid when the property is finally sold.

As per the Tax percent, both the parties have to pay withholding tax. If the property is filed on income tax by the buyer, it remains 2%, but if the buyer is a non-filer, the tax rises to 45%. The huge increase ensures that property buyers should become tax filers. The same is for the sellers. If they are a filer, they have to pay 1% of tax, but if they are non-filer, the tax will charge as much as 25% withholding tax.

To know the exact amount of tax on your property, visit the taxation website of the Government of Pakistan.

Who is Exempt from Paying Tax?

Following are the pointers of tax exemption:

  1. A residential house on a land area less than 5 Marla, which is also not a category ‘A,’ enjoys the tax exemption.
  2. The annual rent of property cannot exceed PKR 4,320. It makes it tax-free.
  3. A single only house with only PKR 6,480 rent, which also occupied by the owner for residence, makes its way to tax-exempt.
  4. The property, including buildings and homes owned by widows, orphans, or disabled persons with up to PKR 12,150 per year, are exempted.
  5. The buildings owned by the government or local semi-government authorities, i.e., Corporation, Welfare Centre, Municipality, or town committee.
  6. A single property owned by government servant either retired with up to 1 Kanal is exempted.
  7. The mosques and religious areas don’t come under the tax.
  8. The parks, schools, hospitals, boarding, and libraries are tax exempted.
  9. If any property’s rent is dedicated to the religious or charitable institution, it stands as tax-free.

How You Can Pay Your Taxes:

There are three easy ways you can pay property taxes in Pakistan including:

Tax Collection Department:

Every province in Pakistan has its own respective tax collection department. You can easily pay your taxes by contacting the tax department of your province and pay your taxes following the procedure advised by them.

Tax Collection via Banks

Another easy way to pay your tax in Pakistan is via banks. You can do so by generating an online property tax challan and paying your tax amount.

Online Banking System

To make tax payments even more convenient you can make online payments through the online banking systems from comfort of your own homes.

tax on property in pakistan

How to calculate your tax?

The Government of Pakistan has initiated a site to calculate the exact taxable amount for the benefit of property owners. Now you can calculate the tax by just entering the details. The site is


No matter which property you own too much or too little, one should stand as a responsible citizen. The responsible citizen remains accurate about their tax details. This is an act that builds the economy of the country. If we have a look at real estate, people like to buy plots and homes in different private societies. The societies are Blue World City, Capital Smart City, Multi Gardens, B-17, and Park View. The societies offer a wide range of plot choices from 5 Marla, 7 Marla, 8 Marla to 20 Marlas.

The tax applies to all private/government property buyers and sellers. Thus, if you decide not to pay it, strict action can be taken against you by the FBR. The government has made it easy to calculate your tax and pay within a due time via banks, tax department, or online transfers.

The property prices are on the rise day by day, so it is the best investment opportunity one can avail. The investment of today is the Return on Investment tomorrow. For more details about a property don’t hesitate to contact:

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