Section 236K of the Income Tax Ordinance 2001 outlines advance tax collection requirements for property buyers, transferees and overseas Pakistanis.
The Federal Board of Revenue (FBR) has defined the rules for advance tax collection on the purchase or transfer of immovable property during tax year 2027.
According to the Income Tax Ordinance 2001, updated up to June 30, 2026, Section 236K requires advance tax to be collected from buyers or transferees when an immovable property is registered, recorded or transferred.
Under Section 236K, any person responsible for registering, recording or attesting a property transfer must collect advance tax at the rates specified in Division XVIII of Part IV of the First Schedule.
The provision covers registration and transfer authorities, housing authorities, housing societies, co-operative societies, public and private real estate projects, joint ventures, private commercial concerns and property registrars.
Adjustable advance tax and overseas Pakistanis
The advance tax collected under Section 236K is adjustable against the taxpayer’s overall tax liability.
However, a special provision applies to non-resident individuals holding a Pakistan Origin Card (POC), National Identity Card for Overseas Pakistanis (NICOP) or Computerised National Identity Card (CNIC).
The tax collected from such individuals becomes a final discharge of their tax liability where they acquire property through a Foreign Currency Value Account (FCVA) or Non-Resident Rupee Value Account (NRVA) maintained with an authorised bank in Pakistan under State Bank of Pakistan foreign exchange regulations.
Tax collection on property instalments
Section 236K also requires advance tax collection when instalments are received for the purchase or allotment of immovable property, where ownership is transferred after all payments have been completed.
If the required tax has already been collected through instalments, no additional tax will be charged at the time of transferring the property, provided the amount collected equals the tax payable under the section.
Exemption for expatriate Pakistanis
The provision does not apply to schemes introduced by the federal or provincial governments, or authorities established under relevant laws, specifically for expatriate Pakistanis.
However, payments under these schemes must be made in foreign currency remitted from outside Pakistan through normal banking channels.
Tax year 2027 runs from July 1, 2026, to June 30, 2027.