Islamabad, February 16, 2026 – The Federal Board of Revenue (FBR) has reported a sharp 29% decline in advance income tax collection on immovable property purchases during the first seven months (July to January) of fiscal year 2025-26, following significant reductions in tax rates.
According to FBR data, collection under this head fell to Rs47 billion in July–January FY26, compared with Rs66 billion during the same period last year. In January 2026 alone, the collection was Rs8.16 billion, down from Rs11.54 billion in January 2025, maintaining the 29% year-on-year decline.
The advance income tax on property transactions is levied under Section 236K of the Income Tax Ordinance, 2001, and is applicable on purchases or transfers of immovable properties. Experts attribute the drop in revenue primarily to the steep reduction in tax rates for FY26.
FBR Advance Tax Rates on Property Purchases (FY26 vs FY25)
| S. No. | Amount (PKR) | Tax Rate FY26 (ATL) | Tax Rate FY25 (ATL) |
| 1 | ≤ 50 million | 1.5% | 3% |
| 2 | >50 million ≤100 million | 2% | 3.5% |
| 3 | >100 million | 2.5% | 4% |
Note: Taxpayers not on the Active Taxpayers List (ATL) are charged 10.5%, 14.5%, and 18.5% respectively. Those who filed returns late and appeared on the ATL with default surcharge pay 4.5%, 5.5%, and 6.5% for FY26.
The reduced tax rates were part of the government’s effort to incentivize property transactions and stimulate investment in the real estate sector. However, the policy has caused a noticeable shortfall in FBR revenue, prompting authorities to closely monitor fiscal implications while encouraging compliance.
The FBR continues to track property transactions and advance tax collection trends, with policymakers evaluating the balance between encouraging property investments and maintaining revenue targets.