Is 236K charged when I buy a society file or pay for an apartment in installments?

Buying on installments does not move 236K out of the picture. It brings the collection forward. Under the Income Tax Ordinance, 2001, as amended to 30 June 2026, a builder, developer or society that takes installments must collect 236K advance tax along with them, and the buyer is not charged again at the final transfer once the full amount has been collected. The rate below is the one in force for tax year 2027 (1 July 2026 to 30 June 2027).

What does the law say?

Section 236K has three parts that matter here.

Section 236K(1) requires the person responsible for “registering, recording or attesting transfer” of immovable property to collect advance tax from the purchaser or transferee at the rate in Division XVIII of Part IV of the First Schedule. An Explanation clarifies that this person includes whoever registers, records or attests transfers for a local authority, housing authority, housing society, co-operative society, public and private real estate projects registered or governed under any law, joint ventures, private commercial concerns and the registrar of properties.

Section 236K(3) covers installment sales. Any person “responsible for collecting payments in installments” for purchase or allotment of immovable property, where the transfer happens only after all installments are paid, must collect advance tax from the allottee or transferee “at the time of collecting installments”, at the Division XVIII rate.

The proviso to section 236K(3) says that where tax has been collected along with installments, no further tax under the section is collected at the time the property is transferred to that buyer, where the tax collected in installments “is equal to the amount payable in this section”.

How does it work in practice?

• Society files. Section 236K does not use the word “file”. What it covers is a housing society or real estate project recording a transfer. When a society records a file moving from one person to another, the Explanation brings that recording within section 236K(1). The seller side is the same: section 236C has an identical Explanation, so the society also collects 236C from the person selling the file.
• Off-plan apartments and shops. A developer taking installments collects 236K with those installments under section 236K(3).
• Rate and base. For tax year 2027, Division XVIII reads: “The rate of tax to be collected under section 236K shall be 1.25% of the fair market value of the immovable property.” Fair market value comes from section 68: the FBR notified value for the area under section 68(4), or the stamp duty value under section 68(5) where FBR has notified none.
• Adjustable. Section 236K(2) makes the tax adjustable against the buyer’s income tax liability for the year, subject to a proviso for certain non-resident buyers paying through foreign currency or NRP accounts.

Worked example (illustrative figures)

Hamza, a filer in Karachi, books an apartment in a private project. The project will transfer the apartment to him only after 16 quarterly installments. The fair market value for 236K purposes is Rs. 16,000,000.

Total 236K payable

• Rs. 16,000,000 x 1.25% = Rs. 200,000

During the installment period

• The developer collects 236K with the installments under section 236K(3).
• By the last installment, the 236K collected adds up to Rs. 200,000.

At transfer

• Tax collected with installments (Rs. 200,000) equals the amount payable under the section (Rs. 200,000).
• Under the proviso, no further 236K is collected when the apartment is transferred into Hamza’s name.

Section 236K(3) does not say how the total is to be divided between individual installments. It says only that tax is collected “at the time of collecting installments” at the Division XVIII rate. The split in any real schedule comes from the developer, not from the text of the Ordinance.

What if …?

What if less than the full 236K was collected with the installments? The proviso applies only where the tax already collected equals the amount payable under the section. The text does not spell out how a shortfall is dealt with at transfer.

What if I sell my file before possession? The buyer of the file is a transferee under section 236K(1), and you are a seller under section 236C(1), so both taxes can apply to the file transfer recorded by the society. How any 236K you paid earlier is treated for your own return is a matter for the adjustable tax rules on the related page.

What if the buyer is not on the active taxpayers’ list? The Tenth Schedule sets much higher 236K rates for such buyers. See the non-filer rate page linked below.

Common mistakes

• “Files are not property, so no 236K.” The Explanation to section 236K(1) turns on who records the transfer (a housing society or real estate project), not on what the document is called.
• “I paid 236K with installments, so I also pay at transfer.” The proviso to section 236K(3) prevents a second collection once the full amount has been collected.
• Using the booking price as the base. Division XVIII uses fair market value under section 68, which may differ from the price in the booking form.

What to check in the official text

Read section 236K(1) with its Explanation, sub-section (3) and its proviso, and Division XVIII of Part IV of the First Schedule in the consolidated Ordinance amended to 30 June 2026. The FBR valuation notifications under section 68(4) are separate SROs not held here. Check whether your project or area is listed and what value applies to an under-construction unit. The Ordinance does not address those points itself.