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How Property Tax is Calculated and Paid in Pakistan?

Property owners in Pakistan are obliged to pay tax for commercial and residential properties under urban immovable property tax acts of a certain province. However, all the tax is levied on the value of the property and its location area. Paying taxes is important for property owners otherwise a tax lien will be implied by the local government or the property will be foreclosed. If anyone finds a way to get exemption from paying property tax, they may have to face serious troubles in the future by FBR (Federal Board of Revenue).

What is a property tax?

Property tax refers to the amount you pay because of property owning, buying, or selling. This includes sales tax and maintenance tax. The sales tax is paid at the time of property purchase. Hence, this tax can be in form of stamp duty, town tax, withholding tax, registration fee, and capital value tax according to the taxation rules of the province you are living in. You have to pay maintenance tax every year. People who are planning to buy property must keep in mind certain taxes they have to pay.

How Does Property Tax System Work In Pakistan?

Pakistan calculates and collects property tax as per the Urban Immovable Property Tax act since 1958 both for commercial and residential properties. However, all the taxes are collected by urban local governments. Whether you are a plot owner, homeowner, or commercial property owner, the tax is levied on the annual rental value of your property according to Immovable property tax acts. However, the property tax rates vary as per the province. The rental value of the property does not mean the actual rental value but an estimated rental amount on which your property can be rented out.

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Punjab Property Tax

According to Excise and Taxation department of Punjab, the tax is levied on 5% annual rental value of a property. The rental value is determined according to the property location, size, and category.

punjab property tax

Sindh Property Tax

According to Excise and Taxation department of Sindh, the tax is levied on 25% of the property annual rental value.

sindh property tax
excise fee

How To Calculate Property Tax In Pakistan?

Property tax calculation requires considerable knowledge and care. The excise, taxation & Narcotics control department of all provinces has made the calculation simple, fast, and efficient by introducing online calculators. Also, you can make calculations manually with the help of valuation tables.

Check Property Tax Online In Pakistan

Now, you can calculate and check property tax online in Pakistan with more accuracy. You can check the property tax in Punjab, property tax Lahore, Sindh, and other provinces. However, the online property check calculator allows you to evaluate tax value while sitting at home. Here are the steps to check property tax online.

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How to Check Property Tax Online in Punjab?

  1. Open the official website of excise, taxation & Narcotics control department. Find and select the category to which your property belongs
  2. Choose from the residential and commercial category
  3. Select type of building use
  4. Mention the Covered area of your property
  5. Select from self-used or rented options
  6. Choose location Main Road or off-road (usually mentioned in commercial property)
  7. Select new calculator to know the tax according to current rates

How to Check Property Tax Online in Sindh?

  1. Open the official website of excise, taxation & Narcotics control department Punjab. https://excise.punjab.gov.pk/property_tax
  2. Select Tax Calculator from the menu
  3. Find and select the category to which your property belongs
  4. Choose from the residential and commercial category
  5. Select type of building use
  6. Mention the Covered area of your property
  7. Select from self-used or rented options
  8. Choose location Main Road or off-road (usually mentioned in commercial property)
  9. Select new calculator to know the tax according to current rates

Property Calculation Through Valuation Table

You can also check the levied tax on your residential and commercial property through the valuation table issued by the excise & taxation departments of provincial governments. However, these tables are updated regularly according to the provincial property value measures. However, the same property calculation formula is applied in each province.

First, you should have the annual rental value of your property. The number to calculate property value differs according to property type and size. You can calculate property tax both for commercial and residential assets with the help of valuation tables. However, the tables are different for both categories. Find the category and your property area from the valuation table. Calculate property tax in the following ways!

  1. Get the total land area of your property
  2. Per square yard rent prescribed in valuation table
  3. (Total Land Area of a Property) x (Per square yard rent prescribed in Valuation Table) = A
  4. (Total Covered Area of a Property) x (Per square foot rent prescribed in Valuation Table) = B
  5. Add A and B to get the gross annual rental value of your property (A + B) x 12 = Gross Annual Rental Value (GARV)
  6. GARV – 10% of GARV = Annual Rental Value (or annual value)

Which Properties Are Exempted From Tax In Pakistan?

Some properties that are exempted from tax in Pakistan includes:

  • Residential properties that are less than 5 Marla (In Lahore Bahria town, Gulberg, and other posh areas, the property tax is also applied for houses less than 5 Marla.)
  • Properties not exceeding the annual rental value of PKR 4,320.
  • A single house with PKR 6,480 rental value
  • Properties owned by orphans, widows, and disabled persons with up to PKR 12,150 annual rental value
  • Government buildings & welfare centers
  • Mosques and other religious buildings
  • Libraries, schools, boarding, parks, and hospitals are tax-free

How To Pay Tax In Pakistan?

You can pay property tax in Pakistan in multiple ways that include!

Pay Property Tax Online

FBR is providing online tax payment facility for the ease and convenience of people. You can pay your tax through your online bank account. For this, you need to follow the following steps!

  • Go to the official website of FBR
  • Get your PSID number from the website
  • Log in to your bank account
  • Go to bill payment, select FBR and enter your PSID to pay tax
  • After paying tax, you will receive a confirmation computerized receipt through email or SMS

Pay Property Tax With ATM

  • Go to the official website of FBR
  • Get your PSID number from the website
  • Go to any ATM
  • Go to bill payment, select FBR and enter your PSID to pay tax
  • After paying tax, you will receive a confirmation computerized receipt through email or SMS

Provincial Tax Calculation Department

Every provincial government has its own tax collection departments. You can go to those departments and pay tax easily by following the simple procedure.

Pay Tax Via Banks

You can also easily pay property tax in banks by generating a property challan online and then paying the tax.

Types Of Property Tax In Pakistan

In Pakistan, there are multiple types of property taxes that are imposed on you while making a sale or purchase of any property. The main property tax types in Pakistan are as follows!

Capital Value Tax

Capital gain tax is imposed on the buyer of a property at the time of purchase based on the capital value of assets. According to Finance Act 2006, this tax is levied at 2% of the recorded property value. Those who exchange or gift properties are liable to pay CGT. However, inherited property transfer is excluded from this tax.

capital value tax

Withholding Tax (WHT)

Withholding tax refers to a federal tax that both buyer and seller of any asset have to pay. However, the buyers have to pay 2% tax in case they file income tax returns and 4% if income tax is not filed. Buyers will pay WHT only if the property they are buying is worth more than 4 Million PKR. However, this tax is payable at the time of buying-selling property by both parties.

capital value tax

Capital Gain Tax (CGT)

Capital gain tax is payable as per the profit margin gained by the seller. This tax is a federal tax that is applied on the properties that were sold in the first three years after purchase. You have to pay 10% tax on the profit margin if you sold out the property within the same year you bought it. 7.5% is applied in the second year and 5% in the third year. After 3 years of purchase, you will be exempted from CGT.

As a responsible citizen, paying property tax is your obligation to make the economy of the country stronger. However, if you hide your actual taxation details or find ways not to pay tax, you will have to face penalties and serious lawful actions from FBR and other concerned authorities.

capital gain tax

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