ISLAMABAD: Withholding tax collected on the sale of immovable property in Pakistan increased by 56.9% during FY2025-26, according to data from the Federal Board of Revenue (FBR), marking an increase of approximately Rs. 66.7 billion compared with the previous fiscal year.
The collection is made under Section 236C of the Income Tax Ordinance, 2001, which requires advance tax to be collected when ownership of immovable property is transferred. The tax is generally collected at the time of registration or transfer and can subsequently be adjusted against the seller’s annual tax liability, subject to applicable rules.
The sharp increase in revenue comes amid changes to the property taxation framework in recent years. Tax rates applicable under Section 236C have been revised through successive finance legislation, affecting the amount collected from property sellers based on their taxpayer status and other applicable conditions.
As a result, the 56.9% increase in tax collection should not necessarily be interpreted as an equivalent increase in property sales or transaction volumes. Higher property values, changes in applicable tax rates, improved documentation and stronger tax compliance can all influence the amount collected.
The rise also comes within broader growth in withholding tax revenues from several sectors. FBR data indicates increases in collections from other sources, including contracts and imports, during the same fiscal year.
For property sellers, Section 236C remains an important financial consideration when completing a property transaction. The amount payable can vary according to the seller’s filer status and the applicable tax rules at the time of transfer. Sellers should therefore confirm their current tax status and applicable rates before finalising a transaction.
The latest figures provide an important indicator of increased government revenue from property transfers, but they do not independently establish the overall performance of Pakistan’s real estate market. More detailed transaction data would be required to determine how much of the increase resulted from higher property values, greater transaction activity or improved tax compliance.
For investors and property market analysts, the data highlights the growing significance of property transactions within Pakistan’s formal tax system and the need to consider taxation alongside broader market indicators when assessing real estate activity.
