How much tax is collected from the seller when a property is sold or transferred (section 236C)?

A seller of property in Pakistan pays income tax at the point of transfer, separately from the buyer. The tax is collected under section 236C of the Income Tax Ordinance, 2001 by the office that registers or records the transfer. The rate here is from the Ordinance as amended to 30 June 2026 and applies to transfers in tax year 2027 (1 July 2026 to 30 June 2027).

What does the law say?

Section 236C(1) says any person responsible for registering, recording or attesting the transfer of immovable property “shall collect from the seller or transferor advance tax at the rate specified in Division X of Part IV of the First Schedule”.

Section 5 of the Finance Act, 2026 substituted Division X with a single line: “The rate of tax to be collected under section 236C shall be 2.75% of the gross amount of the consideration received.”

Seller	Rate under section 236C	Base
Appears in the active taxpayers’ list	2.75%	Gross amount of the consideration received

The Explanation to section 236C(1) says the collecting person includes those registering transfers for a local authority, housing authority, housing society, co-operative society, public and private real estate projects, joint ventures, private commercial concerns and the registrar of properties.

Can the consideration be shown below the FBR value?

No, not for this tax. Section 68(6)(ii) lists “consideration received” as mentioned in Division X, and says it “shall not be less than the fair market value as determined under sub-section (4) or (5)”.

• Section 68(4) is the value the Board notifies for an area, usually called the FBR valuation table.
• Section 68(5) applies where no Board value exists, and uses the value fixed for stamp duty by the District Officer (Revenue) or other authorised authority.

So the base is the higher of the actual price received and the notified or stamp duty value. The Explanation to section 68(6) adds that where property is sold by auction and the notified value differs from the auction price, the higher of the two applies.

Worked example (illustrative figures)

Imran, who appears in the active taxpayers’ list, sells a flat in Gulshan-e-Iqbal, Karachi in December 2026.

Case 1: deed price below the FBR value. Deed price Rs. 20,000,000. Notified value Rs. 22,000,000.

1. Base: not less than Rs. 22,000,000 under section 68(6)(ii).
2. Tax: Rs. 22,000,000 x 2.75% = Rs. 605,000.

Case 2: deed price above the FBR value. Deed price Rs. 25,000,000. Notified value Rs. 22,000,000.

1. Base: gross consideration received, Rs. 25,000,000.
2. Tax: Rs. 25,000,000 x 2.75% = Rs. 687,500.

Case 3: as Case 1, but Imran is not in the active taxpayers’ list. The Tenth Schedule rate for section 236C is 11.5%.

• Rs. 22,000,000 x 11.5% = Rs. 2,530,000.

Who is excluded from 236C?

The proviso to section 236C(1) says the sub-section does not apply to a seller who is the dependant of a Shaheed of the Pakistan Armed Forces, or of a person who died in service of the Armed Forces or of the Federal or a Provincial Government. After the Finance Act, 2024 it also covers war wounded persons, ex-servicemen and serving personnel of the armed forces, and ex-employees and serving personnel of the Federal and Provincial Governments. The relief is for the first sale of property acquired from or allotted by the Federal or a Provincial Government or an authority, certified by the official allotment authority, and acquired or allotted “in recognition of or for services rendered”.

Sub-section (4), as printed in the consolidated text, separately excludes a seller who is a dependant of a Shaheed or of a person who died in service, and the first sale of immovable property acquired or allotted as an original allottee, duly certified by the official allotment authority. The consolidated text shows an earlier sub-section (4) omitted and this one added by the Income Tax (Fourth Amendment) Act, 2016, so read both provisions together in the official PDF.

What if the seller is an overseas Pakistani who paid through FCVA or NRVA?

The second proviso to section 236C(1) says that where the seller is a non-resident individual holding a POC, NICOP or CNIC who acquired the property through a Foreign Currency Value Account or NRP Rupee Value Account, the tax collected “shall be final discharge of tax liability in lieu of capital gains taxable under section 37”. The adjustable-or-final page explains this further.

What did the rate look like before 1 July 2026?

The footnote to Division X records that the Division replaced by the Finance Act, 2026 had three bands by gross consideration: 4.5% up to Rs. 50 million, 5% above Rs. 50 million up to Rs. 100 million, and 5.5% above Rs. 100 million. A transfer registered before 1 July 2026 fell under those rates.

Common mistakes

• Assuming the buyer’s 236K covers the seller. They are separate collections under separate sections, one from each party.
• Using the deed price when it is below the FBR table. Section 68(6)(ii) makes the notified or stamp duty value the floor.
• Treating 236C as the capital gains tax itself. Section 236C(2) makes it adjustable, apart from the stated exceptions. Capital gains on property are charged separately under section 37.

What to check in the official text

Read section 236C, Division X of Part IV of the First Schedule, section 68 and rule 1 of the Tenth Schedule. Sub-section (2A) of section 236C still refers to discharge of liability under section 7E, which the Finance Act, 2026 omitted from the Ordinance. The consolidated text does not say how sub-section (2A) operates after that omission, so check any later notification or amendment. The FBR valuation notifications under section 68(4) are not held in this corpus. Provincial stamp duty and registration charges are outside this corpus.