Who is exempt from 236K or 236C, and is there relief for first-time home buyers?

Exemptions from 236K and 236C exist, but they are narrow. Most are tied to who the seller is or to a particular government scheme, not to the size of the property or whether it is your first home. This page lists what the Income Tax Ordinance, 2001, as amended to 30 June 2026, actually excludes, and what it does not.

What does the law say?

Exemptions from 236C (tax on the seller)

Proviso to section 236C(1). Sub-section (1) 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 the Federal or Provincial Government. The proviso extends to a war wounded person in such service, ex-servicemen and serving personnel of the Armed Forces, and ex-employees or serving personnel of the Federal and Provincial Governments. It applies only to the first sale of property acquired from or allotted by the Federal or Provincial Government or a certified authority, where the property was given in recognition of or for services rendered.

Section 236C(4). Sub-section (1) does not apply to (a) a seller who is a dependant of a Shaheed of the Armed Forces or of a person who died in service of the Armed Forces or the Federal and Provincial Governments, and (b) “the first sale of immovable property which has been acquired or allotted as an original allottee, duly certified by the official allotment authority.” As printed in the consolidated text, clause (a)(i) repeats the words “a seller, if the seller is dependent of”, and clauses (a) and (b) are joined by “and”. The text does not make clear whether (b) is a separate exemption for any original allottee or a condition attached to (a).

Second Schedule, Part I, clause (114B) exempts the profits and gains of the persons named in the proviso to section 236C(1) on that same first sale. So for them, the capital gain itself is exempt, not just the advance tax.

Exemptions from 236K (tax on the buyer)

Section 236K(4). Nothing in section 236K applies to a scheme introduced by the Federal Government, a Provincial Government or an Authority established under federal or provincial law for expatriate Pakistanis. A proviso requires payment in foreign exchange remitted from outside Pakistan through normal banking channels.

Exemptions from both

Section 236O. Advance tax under the chapter is not collected from:

• the Federal Government or a Provincial Government;
• a foreign diplomat or a diplomatic mission in Pakistan; or
• a person who produces a certificate from the Commissioner that his income during the tax year is exempt.

Second Schedule, Part IV lists entity-specific exclusions. Clause (95) switches off 236K for three named Pakistan Sukuk companies as payers. Clauses (96) and (97) switch off 236C for named Sukuk companies as recipients. Clause (97A) switches off capital gains tax, 236C and 236K for the National Highway Authority on transfers to and from the named Sukuk companies. None of these help an individual buyer or seller.

Is there relief for first-time home buyers?

Not from 236K. No provision in section 236K, section 236O or the Second Schedule exempts a first home, a small house or a low-priced flat. The Division XVIII rate for tax year 2027 is 1.25% of fair market value, whatever the size of the property.

The nearest relief in the Ordinance is different. Section 63A gives an individual a tax credit for profit on debt paid on a loan used to build or buy “one personal house having land area up to two thousand five hundred square feet or flat having total area up to two thousand square feet.” It is claimed in the annual return and does not reduce 236K at registration.

Worked example (illustrative figures)

Case 1: a Shaheed’s widow sells an allotted plot. Nasreen, widow of a Shaheed, sells for the first time a plot in Rawalpindi allotted by the government in recognition of her husband’s service. Fair market value is Rs. 12,000,000.

• 236C on Nasreen: nil, under the proviso to section 236C(1).
• Without the exemption, it would have been Rs. 12,000,000 x 2.75% = Rs. 330,000.
• 236K on the buyer: Rs. 12,000,000 x 1.25% = Rs. 150,000. The buyer has no matching exemption.

Case 2: a first-time buyer. Usman, a salaried filer, buys his first flat in Faisalabad with a fair market value of Rs. 8,000,000.

• 236K: Rs. 8,000,000 x 1.25% = Rs. 100,000. Being a first purchase changes nothing.
• If he financed it with a qualifying bank loan, he may be able to claim the section 63A credit in his return.

What if …?

What if I am an overseas Pakistani? Outside a section 236K(4) scheme, you are not exempt. Two provisos help some non-residents holding a POC, NICOP or CNIC who pay through a Foreign Currency Value Account or NRP Rupee Value Account: the tax collected becomes a final discharge (section 236K(2) for buyers, section 236C(1) for sellers). Part IV clause (111AC) also stops the higher non-filer rate from applying to POC and NICOP holders on these transactions.

What if my income is exempt? Section 236O(c) requires a certificate from the Commissioner. Without it, the registrar collects the tax.

Common mistakes

• Assuming the Shaheed exemption covers the whole deal. It covers the seller’s 236C, not the buyer’s 236K.
• Treating any government-allotted plot as exempt. The proviso applies only to the listed persons, on a first sale, of property given in recognition of service.
• Expecting a small-house exemption. None exists in the text.

What to check in the official text

Read section 236C with its provisos and sub-section (4), section 236K(4), section 236O, and the Second Schedule entries named above in the consolidated Ordinance amended to 30 June 2026. The proof an allottee or dependant needs (allotment authority certificate, Commissioner’s certificate) is not spelled out in these sections. Check the procedure with the registering authority.