Introduction

Property transactions in Pakistan carry a federal tax cost that is decided long before the buyer and seller shake hands, and the single variable that moves that cost most is whether each party's name appears on the Active Taxpayers List on the day of transfer. At the Institute of Corporate and Taxation (ICT), our tax faculty deals with these calculations every week, and the same pattern repeats: the parties negotiate hard on the demand price and then discover a seven-figure tax gap at the registrar's counter. That gap is entirely avoidable, and this guide sets out precisely how, using the law as it stands after the Finance Act, 2026. If you want to see the numbers for your own deal first, our property tax calculator guide for Pakistan runs the arithmetic, and practitioners who want to work with this law professionally can look at our Advance Taxation and Litigation course. Speak to an ICT Course Advisor →

What Are Sections 236C and 236K of the Income Tax Ordinance, 2001?

Sections 236C and 236K of the Income Tax Ordinance, 2001 are advance income tax collection provisions applied at the moment immovable property changes hands. Section 236C is collected from the seller or transferor on the gross amount of consideration received. Section 236K is collected from the buyer or transferee on the fair market value of the property. Both are collected by the authority registering, recording or attesting the transfer.

The collecting agent is not FBR itself. It is the Sub-Registrar, the housing society, the development authority, the cooperative society or the transfer office that processes the change of title. That authority will not complete the mutation or attestation until the challan is deposited, which is why these two sections behave, in practice, like a gate rather than a bill.

Definition: Advance income tax means tax collected before the annual liability is computed. It is a credit against the final liability of the person from whom it was collected, not a separate penalty or a transaction fee.

Neither section creates a new head of income. Both sit inside Part IV of Chapter XII of the Income Tax Ordinance, 2001, which deals with advance collections, and the rates themselves live in the First Schedule (Division X for 236C and Division XVIII for 236K). Anyone studying the architecture of the Ordinance will find our explainer on Income Tax Ordinance 2001 compliance a useful companion, because these two sections cannot be read in isolation from Sections 68, 37 and 170.

What Are the 236C and 236K Rates in Pakistan for 2026-27?

For tax year 2027, a seller on the Active Taxpayers List pays 2.75% of the gross consideration under Section 236C, and a buyer on the ATL pays 1.25% of the fair market value under Section 236K. A seller who is not on the ATL pays 11.5%. A buyer who is not on the ATL pays 10.5%, 14.5% or 18.5% depending on the value of the property.

Section 236C now applies a single flat rate of 2.75% of the gross consideration for sellers on the Active Taxpayer List, while Section 236K applies a flat 1.25% of fair market value for filers irrespective of property size, and the late-filer tier is abolished in both sections.

Legal basis: Divisions X and XVIII, Part IV of the First Schedule to the Income Tax Ordinance, 2001, as amended by the Finance Act, 2026; non-ATL rates read with the Tenth Schedule to that Ordinance. Effective 1 July 2026.

The asymmetry is deliberate. A buyer who stays outside the tax net on a PKR 120 million commercial property pays roughly fifteen times what a filer pays on the identical asset. Readers who want the wider picture across all withholding sections can review our guide on what withholding tax is and how to handle it.

How Did the Finance Act, 2026 Change Property Tax Rates?

The Finance Act, 2026 replaced the value-banded slabs for filers under Sections 236C and 236K with one flat rate each, cut the headline rates substantially, and removed the intermediate "late filer" category entirely. The National Assembly approved the Finance Bill 2026 on 26 June 2026, the Act was enacted after Presidential assent on 27 June 2026, and the amendments took effect from 1 July 2026.

FBR described the intention in its Budget 2026-27 Salient Features as a measure "to encourage documentation and facilitate transactions in the real estate sector".

FBR's Salient Features record the previous position as 4.5 to 5.5 percent under Section 236C and 1.5 to 2.5 percent under Section 236K, reduced and converted into lower flat rates.

A filer selling a PKR 50 million plot paid PKR 2,250,000 under the old 4.5% band and now pays PKR 1,375,000. The saving on one ordinary residential transaction is close to PKR 875,000. For a broader reading of this year's fiscal changes, see our summary of the Pakistan Budget 2026 tax changes.

Why Do FBR's Own Budget Papers Show 1.5% Instead of 1.25%?

Because the figure in FBR's Budget 2026-27 Salient Features reflects the Finance Bill as tabled, not the Finance Act as passed. The Salient Features document records flat rates of 2.75% and 1.5%. The National Assembly reduced the buyer's rate again before enactment, and the operative Section 236K rate for tax year 2027 is 1.25%.

This single discrepancy is the most common source of error in circulating rate cards, and it matters in rupees. On a PKR 100 million purchase, the difference between 1.5% and 1.25% is PKR 250,000.

The enacted position is confirmed by professional commentary on the Act. KPMG Taseer Hadi & Co. records a "single rate of 1.25% advance tax on purchase of immovable property" under Section 236K. Independent tax alerts reached the same conclusion, noting that under the revised framework sellers are subject to advance tax at 2.75% of the consideration received while buyers are subject to tax at 1.25% of the fair market value of the property.

Practical rule: where a budget summary and the enacted Finance Act disagree, the Act governs. Read the First Schedule, not the press release. Professionals who want to build this verification habit systematically will find it drilled throughout our Certified Tax Advisor programme. Enroll in the Certified Tax Advisor Course →

Who Pays 236C and Who Pays 236K?

Section 236C is a charge on the seller or transferor of immovable property. Section 236K is a charge on the buyer or transferee. Both are collected at the same counter, at the same moment, by the same registering authority, but they are the liabilities of two different persons, and each person's own ATL status determines his own rate.

A frequent misunderstanding in the Pakistani market is that one party's filer status helps the other. It does not. If the buyer is a filer and the seller is not, the buyer pays 1.25% and the seller still pays 11.5% on the same transfer. The statuses are assessed separately, on the transaction date, against the current Active Taxpayers List.

Commercially, the burden often shifts through price negotiation, and in many housing societies the parties agree that the buyer will bear both. That private arrangement changes who writes the cheque, not who is liable in law, and it does not change whose name the tax credit lands against in IRIS. Estate agents handling these conversations should read our real estate agent tax guide for Pakistan.

Which Value Is the Tax Charged On: Deed Price, DC Rate or FBR Value?

Section 236K is charged on the fair market value of the property and Section 236C on the gross amount of consideration received. Fair market value for this purpose is determined under Section 68 of the Income Tax Ordinance, 2001, which empowers FBR to notify valuation tables city by city. Where the notified value and the recorded price differ, the higher value sets the floor.

One property in Pakistan can carry three different numbers at once:

1. The deed or agreed price, which is what the parties actually settle on.
2. The DC value, notified by the District Collector for provincial stamp duty purposes.
3. The FBR notified value, issued as an SRO under Section 68(4) of the Income Tax Ordinance, 2001.

Writing a lower figure on the transfer deed does not reduce the federal advance tax, because the notified value operates as a minimum. It does, however, create a documented acquisition cost that will inflate your capital gain when you eventually sell.

FBR revises these tables by individual city notification rather than in one national instrument. Multan's valuation, for instance, was addressed by SRO 650(I)/2026 dated 21 April 2026, and Sialkot by SRO 662(I)/2026 dated 22 April 2026. In the federal capital, an FBR notification issued under Section 68(4) superseded SRO 2392(I)/2025 dated 8 December 2025, and provided that the value of residential and commercial superstructure shall be PKR 3,000 per square foot where the superstructure is up to five years old and PKR 1,500 per square foot where it is older, with the higher of the two values applying in case of conflict with the rural rates notified by the District Collector Islamabad.

Checklist before you pay any token money:

• Confirm the current FBR SRO for your specific city and sector
• Confirm the DC value for the same property
• Confirm the society or authority's own transfer schedule
• Confirm both parties' ATL status on the FBR portal
• Only then agree the net price

Anyone dealing with valuation disputes should also understand how provincial excise departments assess property, which our complete guide to excise and taxation in Pakistan sets out.

How Do I Calculate 236C and 236K Step by Step?

Calculating Section 236C and Section 236K liability takes five steps: establish the taxable value, confirm ATL status on the transaction date, apply the correct rate from Division X or Division XVIII, generate the payment slip, and retain the challan for credit in the annual return. The arithmetic itself is a single multiplication once the value and the status are settled.

Numbered procedure for the buyer (Section 236K):

1. Obtain the FBR notified fair market value for the property from the applicable Section 68(4) SRO.
2. Compare it with the agreed consideration and take the higher figure as the taxable value.
3. Check your own name on the Active Taxpayers List on the FBR portal on the date of transfer.
4. Apply 1.25% if you are on the ATL. If you are not, apply 10.5%, 14.5% or 18.5% according to the value band.
5. Generate a PSID under payment code 64151101, deposit the challan, and hand the CPR to the registering authority.

Numbered procedure for the seller (Section 236C):

1. Establish the gross amount of consideration received, tested against the notified value.
2. Check your own ATL status on the transaction date.
3. Apply 2.75% if you are on the ATL, or 11.5% if you are not.
4. Generate a PSID under payment code 64150301 and deposit the challan.
5. Separately compute capital gains tax under Section 37(1A), and set the 236C challan against it in your return.

The FBR payment codes are 64150301 for Section 236C on sale and 64151101 for Section 236K on purchase.

Our free tax calculator resource handles the multiplication, and students who want to build their own transaction-cost models should look at the Master Advanced Excel course. Request Course Details from ICT →

Is 236C or 236K Refundable?

Yes. For a person on the Active Taxpayers List, both Section 236C and Section 236K are adjustable advance tax. The amount collected at transfer is credited against that person's total income tax liability for the relevant tax year, and any excess is refundable under Section 170 of the Income Tax Ordinance, 2001, on application to the Commissioner.

Recovery depends entirely on filing. If you never file a return, the challan sits in FBR's system as a collection against your CNIC and delivers you nothing. A buyer who pays 10.5% as a non-filer and then files late does not retrospectively convert that payment into a 1.25% payment; the higher amount becomes a credit, but only if there is a return to credit it against.

Three practical points on recovery:

1. Enter the challan in the adjustable tax annexure of your return for the tax year in which the transfer occurred, not the year you remember it.
2. Match the CPR number and CNIC exactly, because mismatched challans are the single most common cause of rejected credits.
3. Where the refund exceeds other liabilities, Section 170 applies the excess against those liabilities first and pays out only the remainder.

Our walkthrough of the IRIS tax refund process in Pakistan covers the application mechanics in detail.

What Happened to the "Late Filer" Category?

The late filer category has been abolished for property transactions. The Finance Act, 2024 had introduced the category by inserting Rule 1A in the Tenth Schedule, with higher rates prescribed only for withholding tax under Sections 236C and 236K, and the Finance Act, 2025 increased those rates further. The Finance Act, 2026 abolished the higher rates for late filers by omitting Rule 1A, which means the rates applicable to late filers are now the same as those applicable to persons filing within the due date or extended due date.

That is a genuine relief for anyone who filed after the deadline but remained on the ATL. It does not mean late filing is now free.

The Finance Act, 2026 raised the surcharge payable for inclusion in the ATL after a late return. The surcharge for an individual increased from PKR 1,000 to PKR 25,000, for an association of persons from PKR 10,000 to PKR 50,000, and for a company from PKR 20,000 to PKR 100,000. The Act further provided that the surcharge condition shall not apply to an individual who furnishes an undertaking to the concerned Commissioner that he shall not purchase, acquire or otherwise obtain ownership or beneficial interest in any property for six months from the date of furnishing the undertaking.

That undertaking is a property-specific trade-off almost nobody is discussing. An individual late filer who is not planning to buy anything can avoid PKR 25,000 by accepting a six-month purchase bar. An individual who is mid-transaction cannot, and should simply pay. Our note on the FBR late filer surcharge for 2026 explains the mechanics.

Is Section 7E Still Payable in 2026?

No. Section 7E of the Income Tax Ordinance, 2001, which taxed deemed income from capital assets situated in Pakistan, has been omitted, and the 7E certificate is no longer part of the property transfer chain. The omission followed a constitutional ruling rather than an ordinary policy change, which is why it applies to the provision itself and not merely to future years.

The Federal Constitutional Court, in C.P.L.A. 1442-K/2022, held that Section 7E of the Income Tax Ordinance, 2001, the deemed immovable property income provision introduced through the Finance Act, 2022, is unconstitutional. The Finance Act, 2026 then omitted the tax imposed on such capital assets as a consequential amendment following that judgment, and the law has not prescribed a mechanism for automatic refund of tax already deposited by taxpayers under the provision.

The absence of a refund mechanism is the operative point for anyone who paid 7E in earlier years. Omission of the section going forward does not automatically credit money already collected, and any recovery will need to be pursued through the ordinary refund and appeal route rather than through an FBR auto-adjustment. Taxpayers holding old 7E demands or notices should review our guide to FBR notices and how to respond.

Warning: administrative screens sometimes outlast the law. If a society or registrar still asks for a 7E clearance certificate, the correct response is to point to the omission of the section by the Finance Act, 2026, not to pay a tax that no longer exists.

Expert Tips and Best Practices for 2026-27

Good property tax planning in Pakistan is mostly calendar management. The rate you pay is fixed by a status you either hold or do not hold on a single day, so the professional work happens weeks before the transfer, not at the counter.

Best practices we apply in live transactions:

1. Sequence ATL restoration before the deal, not after. Inclusion in the ATL following a late return requires payment of the surcharge, and processing takes time. Start at least three to four weeks before an intended transfer.
2. Treat the six-month undertaking as a planning instrument. An individual late filer with no acquisition plans can avoid the PKR 25,000 surcharge by giving the undertaking, but that person then cannot acquire property for six months. Never give the undertaking while a purchase is in contemplation.
3. Net the whole position before agreeing a price. A seller should model 236C plus capital gains tax plus provincial charges and quote a net-of-tax expectation, rather than discovering the gap after the bayana.
4. Document the acquisition cost honestly. Under-recording the purchase price saves nothing federally today and increases the taxable gain on exit.
5. Keep a per-property file. SRO reference for the valuation, ATL screenshots for both parties dated to the transaction day, PSID, CPR, transfer deed and society receipts.
6. Re-check the SRO for your city. Valuation tables are revised by individual city notification and can change mid-year.
7. Watch for Section 114C activation. The restriction needs only a federal notification to become live.

Decision rule: if the difference between your filer and non-filer liability on a pending transaction exceeds the cost of professional return filing, which it almost always does, restoring ATL status is the highest-return hour of work available to you. Our explainer on ATL status checks in Pakistan for 2026 shows how to confirm the position in under two minutes.

Latest Updates and What to Watch Next

As of September 2026, the operative position is the Finance Act, 2026 regime effective from 1 July 2026, with flat filer rates, no late-filer tier, no Section 7E and a dormant Section 114C. Three developments are worth monitoring over the remainder of financial year 2026-27.

First, the refund question on Section 7E. The provision has been omitted following a constitutional ruling, but no automatic refund mechanism has been prescribed for tax already deposited. Practitioners should expect this to be worked out through refund applications and appellate proceedings rather than an administrative credit.

Second, activation of Section 114C. The cabinet declined to notify 1 July 2026 as the commencement date. A change of position would immediately affect transactions above PKR 100 million.

Third, city-level valuation revisions. FBR continued to issue Section 68(4) notifications through 2026, and an upward revision in your city changes your tax base even though the rate stays at 1.25% or 2.75%.

Alongside this, the Finance Act, 2026 introduced automated cross-matching of banking information, under which banking companies and electronic money institutions report deposits and withdrawals exceeding PKR 100 million for algorithmic comparison against tax declarations. Anyone funding a large property purchase through the banking system should assume the funding trail is visible. Our overview of the FBR Active Taxpayer List for 2026 is updated as the position changes.

Career Scope: Who Needs This Knowledge Professionally?

Property withholding is one of the highest-volume advisory areas in Pakistan, and it is one of the few where a single correct answer saves a client a seven-figure sum in the same week. That makes it commercially attractive for tax practitioners, lawyers, accountants and estate professionals alike.

Demand comes from four directions: individual buyers and sellers who need a transfer-cost computation, housing societies and developers who act as collecting agents and carry statutory default risk, overseas Pakistanis who need the POC/NICOP route handled correctly, and businesses acquiring commercial property that must integrate the advance tax credit into their corporate return.

A practitioner who can read Division X and Division XVIII, trace a rate change through a Finance Act, and defend a valuation position before an assessing officer is doing work that generic software cannot replicate. That competence is exactly what our Advance Taxation and Litigation course is built around, while professionals wanting a broader corporate advisory base often pair it with the Certified Business Advisor programme. Earnings expectations across the field are set out in our analysis of tax consultant salaries in Pakistan for 2026. Book a Free Counselling Session at ICT →

Why Choose ICT for Mastering Property Taxation Under Sections 236C and 236K?

The Institute of Corporate and Taxation (ICT) teaches property withholding the way it is actually practised in Pakistan, working from the bare Act, the First Schedule, the Tenth Schedule and the live FBR portal rather than from summary rate cards that go stale within weeks of a Finance Act. Our faculty includes practising chartered accountants and advocates who appear before Inland Revenue authorities, which is why our material caught the Bill-versus-Act rate difference under Section 236K that a large part of the market is still publishing incorrectly.

Training at ICT is practical by design. Students compute 236C and 236K on real valuation tables for their own city, generate live PSIDs, reconcile CPRs into a return in IRIS, and work through capital gains interaction on actual holding periods. Every programme is delivered across our Islamabad, Lahore and Karachi campuses as well as online, so working professionals and overseas Pakistanis can study without relocating. Certificates issued by ICT are independently confirmable through our certificate verification portal, and our position as a specialist tax training institute is built on placement outcomes rather than marketing claims.

If you want to move from understanding these two sections to advising on them, start with the Certified Tax Advisor course for the compliance foundation, or the Advance Taxation and Litigation course if your interest is assessment, appeal and representation. You can review the full portfolio on our courses page or read more about ICT. Enroll Today — Contact ICT →

FAQs

1. What is the 236C tax rate in Pakistan for 2026-27?
Section 236C is charged at a flat 2.75% of the gross consideration for sellers on the Active Taxpayers List, and 11.5% for sellers who are not. The value-based slabs that applied in tax year 2026 were removed by the Finance Act, 2026 with effect from 1 July 2026.

2. What is the 236K tax rate for buyers in 2026-27?
Section 236K is charged at a flat 1.25% of fair market value for buyers on the Active Taxpayers List. Non-filer buyers pay 10.5% up to PKR 50 million, 14.5% between PKR 50 million and PKR 100 million, and 18.5% above PKR 100 million.

3. Who pays 236C, the buyer or the seller?
The seller or transferor pays Section 236C. The buyer or transferee pays Section 236K. Both are collected by the registering authority at the time of transfer, but each party's own ATL status sets that party's rate.

4. Is 236K refundable in Pakistan?
Yes, for a person on the Active Taxpayers List. Section 236K is adjustable advance tax, credited against the annual liability, with any excess refundable under Section 170 of the Income Tax Ordinance, 2001 on application to the Commissioner. A person who never files cannot recover it.

5. Is Section 7E still applicable in 2026?
No. Section 7E was omitted by the Finance Act, 2026 following the Federal Constitutional Court's ruling in C.P.L.A. 1442-K/2022 that the provision was unconstitutional. The 7E certificate is no longer required to complete a property transfer.

6. Do late filers still pay higher property tax?
No. The Finance Act, 2026 omitted Rule 1A of the Tenth Schedule, so late filers on the ATL now pay the same 2.75% and 1.25% rates as timely filers. A separate surcharge for inclusion in the ATL after a late return still applies.

7. Can a non-filer buy property in Pakistan in 2026?
Yes, at present. The Section 114C restriction on property purchases above PKR 100 million by ineligible persons requires a federal government notification to take effect, and the cabinet declined to approve activation from 1 July 2026. Punitive 236K rates still apply.

8. What rate do overseas Pakistanis pay on 236C and 236K?
Non-resident holders of a POC or NICOP can pay at filer rates through FBR's Overseas Pakistanis facility, subject to Commissioner approval of the PSID and to their stay in Pakistan being less than 183 days in the financial year.

9. Is 236C the same as capital gains tax?
No. Section 236C is advance tax on the whole transfer value, while capital gains tax under Section 37(1A) is charged on the profit. For a filer, 236C is credited against the capital gains liability rather than added to it.

10. Which value is 236K calculated on?
On the fair market value determined under Section 68 of the Income Tax Ordinance, 2001, as notified by FBR through city-specific SROs, or the consideration if higher. A lower figure written on the deed does not reduce the collection.

Conclusion: What Sections 236C and 236K Mean for Your Next Transaction

Property advance tax in Pakistan has become simpler and cheaper for compliant taxpayers, and considerably harsher for everyone else. For tax year 2027, a seller on the Active Taxpayers List pays 2.75% under Section 236C and a buyer on the ATL pays 1.25% under Section 236K, both as flat rates with no value bands. A seller outside the net pays 11.5%, and a buyer outside the net pays between 10.5% and 18.5%. The Finance Act, 2026 also removed the late-filer tier and omitted Section 7E along with its certificate requirement at transfer.

The single most valuable recommendation in this guide is a timing one. Your rate is fixed by a status you either hold or do not hold on the date of transfer, so ATL restoration must be completed weeks before the deal, not discovered at the registrar's counter. On a PKR 30 million plot, that one step is worth roughly PKR 2,775,000 to a buyer and PKR 2,625,000 to a seller. No other half-hour of work in a property transaction returns that much.

The logical next step depends on where you stand. If you are transacting, verify both parties' ATL status and the current Section 68(4) valuation SRO for your city before any token payment, using our guide on ATL status checks in Pakistan for 2026. If you are not yet on the list, start with how to become a filer in Pakistan. If you want to advise others on this law rather than only apply it to your own deals, build the technical foundation through our Certified Tax Advisor course or go deeper into assessment and appeal work with the Advance Taxation and Litigation course.

The Institute of Corporate and Taxation (ICT) trains practitioners on the bare Act, the First Schedule and the live FBR portal, which is why our students catch rate changes that summary cards miss. Talk to our advisors, tell them what you are working on, and they will map the right programme to it. Book Your Free Counselling Session at ICT →