Property Taxes in Pakistan: Types, How to Calculate and Who is Exempt from It

  • ZeeShan Kahloon by ZeeShan Kahloon
  • 2 years ago
  • General
Property Taxes in Pakistan Types, How to Calculate and Who is Exempt from It

Property tax is a tax on real estate that is owned by an individual or a legal body like a business. Many people strive to avoid paying their fair part of the tax. People who understand the importance of paying taxes will continue to file their returns.

When buying a home, the seller and the buyer agree to lower the value of the property on the sales deed in order to save money on taxes. The buyer is responsible for paying withholding tax, while the seller is responsible for paying capital gains tax.

You may now wonder what these taxes are and how many different types of property taxes exist in Pakistan. Here’s everything you need to know regarding property taxes in Pakistan.

How Does Property Tax Work?

Property tax in Pakistan is a provincial tax levied on the annual rental value of a property, based on the individual provinces’ Urban Immovable Property Tax Acts. Every province has its own tax rates. It’s either a set fee or a percentage of the annual rental amount.

The property’s rental value does not imply that it must be rented. It merely provides the government with an estimate of how much rent would be collected if the building were rented out. And Lahore society maps can help you in this regard.

Depending on whether the property is rented out or self-occupied, the tax rate varies by province.

Types Of Property Taxes in Pakistan

The following are the several types of property taxes in Pakistan:

Capital Value Tax (CVT)

Anyone who purchases a property must pay Capital Tax Value. It amounts to 2% of the total amount recorded.

The money is paid to the government when the property is purchased. The capital Value Tax is also included in the property documents. ‘Stamp Duty,’ which is 3% of all legal documents, is charged.

Capital Gains Tax

The Capital Gains Tax is the younger brother of the Capital Value Tax. It is the amount due to the government by the vendor. The money is paid at the moment the property is sold. The tax is imposed on the sellers’ property. Every year, the tax table is updated.

The seller is required to pay capital gain tax after 3 years. The first year’s tax is 10%, the second year’s is 7.5 percent, and the third year’s tax is merely 5%.

Withholding Tax

The withholding tax is a combination of the capital gains and capital value taxes. It is the sum of money that both the buyer and the seller pay. When the property is finally sold, it gets repaid.

Both parties must pay withholding tax based on the tax %. If the buyer files income tax on the property, the tax remains at 2%, but if the buyer does not, the tax jumps to 45 percent.

Property buyers in Pakistan should become tax filers as a result of the significant rise. The sellers are in the same boat. They must pay 1% tax if they file, but if they do not file, the IRS will impose a withholding tax of up to 25%.

You can also visit the Pakistani government’s taxes website to find out the actual amount of tax due on your property. Or get help from the LDA society Lahore map.

What You’ll Need to Submit a Request for Property Tax Records

  • Copy of the applicant’s CNIC
  • Proof of up-to-date payment of Property Tax
  • Application from a registered owner of the property on plain paper with court fee duly affixed

What should you do about your property’s appraisal?

All tangible assets must be assessed for tax payments and calculations. The nature of the occupation and the kind of building are used to assess the properties.

These yardsticks are used to calculate the annual value of the qualities. Property Tax is assessed based on the annual valuation of the property unit.

Payment Schedules for Property Taxes

Property taxes may be deposited on or before September 30th to receive a 5% tax credit for the current fiscal year. Payment must be made within 30 days of the date of service of the Demand Notice and Challan Form.

The tax is placed in the Pakistani Treasury or State Bank, or in the National Bank of Pakistan’s designated branches. Payment can be done via a check (supported by a Challan Form) drawn on a designated bank and made payable to the Excise & Taxation Officer of the relevant district.

How to Calculate Property Tax

Tax is based on the annual rental value. The annual rental value is the estimated amount of money a property will bring in if it is rented out.

Because calculating the annual rental value is complex, this article has simplified the process for you. Each province has its unique tax rate; to make things easier for you, the provinces have issued valuation tables, which contain the numbers you’ll need to figure out your taxes.

Using a property tax calculator is simple. With the help of the following steps, you can understand it better.

  • Step 1: Determine which category your property falls into.
  • Step 2: Enter the figures from the valuation tables into the equation below.

A = (Property’s total land area) x (Per square yard rent)

  • Step 3 Determine the values for each category and enter them into the equation below.

B = (Total covered area of a property) x (Per square foot rent)

  • Step 4: Multiply the answers from the previous two steps by 12. It will calculate your property’s GARV (Gross Annual Rental Value).

Gross Annual Rental Value (GARV) = (A x B) x 12

Step 5: At this stage, you must subtract the GARV from the tax levied by your province.

Property tax in Punjab, for example, is ten percent of your GARV.


Annual Rental Value = GARV – 10% of GARV

Provincial Entry into The Tax Network – A Taxing Process

The Pakistani government and the Federal Bureau of Revenue (FBR) have altered property value tables in order to bring persons earning illicit money into the tax net. These new property valuation rates will determine the real property value, replacing DC rates.

 Property valuations for the real estate sector have increased in 20 of Pakistan’s largest cities, according to the FBR Valuation Tables. This may cause a modest drop in the real estate sector’s operations, but FBR’s tax policies should remain in place.

Although there will be a drop in trading activity for a few days, home values may also drop. People in the middle class can realize their ambition of becoming a homeowner thanks to affordable property prices. There is a ray of hope for the average guy at the end of the tunnel.

The tax process becomes a little easier when you have the right property map in hand. So, must opt for the society maps download option.

Who Isn’t Obliged to Pay Tax?

The following are some tax exemption pointers:

  • Parks, schools, hospitals, boarding houses, and libraries are excluded from paying taxes.
  • The property’s annual rent cannot exceed PKR 4,320. It is therefore tax-free.
  • A residential house with a land size of less than 5 Marla that is not a type ‘A’ is exempt from paying taxes.
  • A single-family home with a monthly rent of only PKR 6,480, which is also used by the owner as a residence, qualifies as tax-exempt.
  • A single property owned by a government employee or retired government employee with up to 1 Kanal is excluded.
  • Government or local semi-government buildings, such as the corporation, welfare centre, municipality, or town committee.
  • If the rent from a property is donated to a religious or charity organization, it is tax-free.
  • The exempted property includes buildings and dwellings held by widows, orphans, or disabled persons with an annual income of up to PKR 12,150.
  • Mosques and religious sites are exempt from the levy.
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