Real estate in Pakistan has long been considered a largely undocumented sector, often used for parking undeclared money. To curb this practice and bring transparency, the Federal Board of Revenue (FBR) has imposed advance tax on property transactions.
If you’re planning to buy or transfer immovable property in 2026, understanding Section 236K of the Income Tax Ordinance, 2001 is crucial—especially if you are a filer, late filer, or non-filer.
🏠 Why Advance Tax on Property Purchases?
The objectives behind Section 236K include:
• Detecting undeclared income
• Documenting real-estate transactions
• Forcing buyers into the tax filing regime
• Discouraging non-filers through higher tax rates
💡 Property transactions are now one of FBR’s strongest audit triggers.
📜 What Does Section 236K Say? (Tax Year 2026)
Under Section 236K of the Income Tax Ordinance, 2001 (updated for TY 2026):
📌 Who Collects the Tax?
Any person responsible for:
• Registering
• Recording
• Attesting transfer of immovable property
This includes:
• Property registrars
• Local authorities
• Housing authorities & societies
• Cooperative societies
• Public & private real-estate projects
• Joint ventures & private developers
📌 From Whom Is Tax Collected?
➡ From the buyer or transferee
➡ At the time of registration or transfer
💰 Property Purchase Tax Rates 2026 (Section 236K)
Tax is charged on the fair market value of the property.
📊 Advance Tax Rates Comparison
| Fair Market Value | ATL (Filer) | Late Filer | Non-ATL (Non-Filer) |
| Up to Rs 50 million | 1.50% | 4.50% | 10.50% |
| Rs 50m – Rs 100m | 2.00% | 5.50% | 14.50% |
| Above Rs 100m | 2.50% | 6.50% | 18.50% |
🔴 Non-filers may pay up to 18.5% tax upfront, dramatically increasing property cost.
⏳ Is This Tax Adjustable or Final?
✅ Adjustable (General Rule)
For most buyers, tax collected under Section 236K is advance adjustable tax, which can be:
• Adjusted in annual income tax return
• Refunded (if excess)
🌍 Final Tax for Certain Overseas Pakistanis
If the buyer is:
• A non-resident individual, and
• Holds POC / NICOP / CNIC, and
• Purchases property through FCVA or NRVA accounts
➡ The tax collected becomes final discharge of tax liability for that transaction.
🏗 Property Purchased on Installments? Read This
If property is purchased through installments:
• Advance tax is collected with each installment
• If full tax is already collected through installments:
✔ No further tax is charged at transfer stage
This applies mainly to:
• Housing societies
• Private & public real-estate projects
🚫 Who Is Exempt from Section 236K?
Section 236K does not apply to:
• Government-introduced schemes
• Federal or Provincial schemes
• Authorities established under law
• Expatriate Pakistanis, provided payment is:
o Made through foreign remittance
o Sent via normal banking channels
📈 Why FBR Focuses on Property Buyers in 2026
✔ Real estate reflects actual wealth
✔ High-value transactions expose non-filers
✔ Digital valuation systems reduce under-declaration
✔ Heavy non-filer tax discourages cash economy
📢 Buying property without being a filer is now extremely expensive.
✅ Key Tips Before Buying Property
✔ Check your ATL status
✔ File pending returns to avoid “late filer” rates
✔ Confirm fair market value used by registrar
✔ Keep tax payment receipts & registration documents
✔ Overseas buyers should use FCVA/NRVA accounts
📌 Disclaimer
This article is for general informational purposes only and does not constitute legal or tax advice. Tax laws and rates may change. Readers are advised to consult the Income Tax Ordinance, 2001, FBR notifications, or a qualified tax professional before entering into any property transaction.