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Capital Gains Tax on Property in Pakistan – CGT Rates & Exemptions 2025

Capital Gains Tax (CGT) is levied on the profit made from the sale of assets such as immovable property and listed company shares in Pakistan.

CGT on Immovable Property (2024-25)

Holding Period	CGT Rate (FBR 2025)
Less than 1 year	15%
1 to 2 years	12.5%
2 to 3 years	10%
3 to 4 years	7.5%
4+ years	0% (Fully Exempt)

Who Pays CGT?

Anyone who sells immovable property (land, house, flat) or listed company shares at a profit is liable for CGT. The tax is computed on the capital gain, not the total sale price.

Key Points

• Property held for more than 4 years is exempt from CGT
• Gains from your primary residence may be partially exempt
• CGT must be declared in your annual income tax return

CGT on Immovable Property — Detailed Breakdown (FBR 2025)

Capital Gains Tax on property depends on two key factors: the type of property and the holding period. Here is the complete current rate schedule:

Holding Period	Immovable Property	Listed Shares (PSX)	Other Assets
Less than 1 year	15%	15%	15%
1 to 2 years	12.5%	12.5%	15%
2 to 3 years	10%	10%	15%
3 to 4 years	7.5%	7.5%	15%
4+ years	0% (Exempt)	5%	15%

Note that the 4+ year exemption applies only to immovable property — not shares. PSX shares held for over 4 years are still subject to 5% CGT, collected by NCCPL at the time of settlement.

How to Calculate Capital Gain on Property

The capital gain is not simply the sale price — it is the profit above your cost, calculated as:

Capital Gain = Sale Price − Purchase Price − Improvement Costs

Let's walk through a practical example. Ahmed buys a plot in Lahore for PKR 8,000,000 in January 2023 and sells it for PKR 12,000,000 in March 2025. He spent PKR 200,000 on boundary wall construction (documented improvement).

• Capital Gain = 12,000,000 − 8,000,000 − 200,000 = PKR 3,800,000
• Holding Period = approximately 2 years 2 months → falls in 2–3 year bracket
• CGT Rate = 10%
• CGT Payable = 3,800,000 × 10% = PKR 380,000

If Ahmed waited just 10 more months (crossing 3 years), his rate would drop to 7.5% — saving him PKR 95,000. And waiting until January 2027 (4 years) would make him fully exempt — saving PKR 380,000.

CGT on Inherited Property — Important FBR Clarification

A critical question many Pakistanis face is: if I inherit property and sell it, does the original purchase date count for CGT purposes or does my inheritance date reset the clock?

FBR clarified this via SRO 456(I)/2025: property inherited through succession is treated as a fresh acquisition for CGT purposes. The holding period starts from the date of the deceased's death (succession date), not the original purchase date. This means:

• If your father bought a property in 2010 and passed away in 2023, your holding period starts from 2023
• If you sell the inherited property in 2024, your holding period is only ~1 year — CGT rate applies at 12.5%
• If you wait until 2027 (4 years from succession), the sale would be fully exempt from CGT

This makes patience extremely valuable when dealing with inherited property. Always consult a registered tax practitioner before selling inherited assets.

How to Pay CGT to FBR

CGT on property must be declared and paid as part of your annual income tax return. Here is the correct process:

1. At the time of property registration (transfer), the Sub-Registrar collects advance CGT — this is an advance payment, not final settlement
2. You must declare the actual capital gain in your annual FBR return (IRIS portal) under the Capital Gains section
3. If the advance CGT collected at registration was more than your actual liability, you can claim a refund
4. If less was collected, you must pay the difference via CPR (Challan Payment Receipt) before filing
5. The sale must also be reflected in your wealth statement — the reduction in property value and increase in cash must be shown

Failure to declare a property sale in your return — even if no CGT is owed (e.g., 4+ years) — is a common mistake that leads to FBR notices, as the Sub-Registrar data is shared with FBR automatically.

How Capital Gains Tax on Property is Calculated — Step by Step

CGT is not calculated on the full sale price — it is calculated only on your capital gain, which is the profit you made. Here is the formula:

Capital Gain = Sale Price − Purchase Price − Improvement Costs
CGT Payable = Capital Gain × Applicable Rate

For example: You bought a plot in Lahore for PKR 5,000,000 in 2022 and sold it for PKR 8,000,000 in 2024 — a holding period of 2 years. You spent PKR 200,000 on boundary wall construction.

Item	Amount
Sale Price	PKR 8,000,000
Purchase Price	PKR 5,000,000
Improvement Cost	PKR 200,000
Capital Gain	PKR 2,800,000
CGT Rate (2–3 year holding)	10%
CGT Payable	PKR 280,000

DC Value vs Agreed Value — Which One for CGT?

This is one of the most common questions about property CGT in Pakistan. The DC value (District Collector valuation) and the FBR value table set minimum transaction values for registration purposes — but your CGT is calculated on the actual agreed consideration, not the DC or FBR table value.

However, if your declared sale price is below the FBR table value for that area, FBR may question the transaction and assess CGT on the higher FBR value. This is why it is important to declare the actual transaction amount accurately in your income tax return.

CGT on Inherited Property — Important FBR Ruling

A key issue for many Pakistani families is CGT when selling inherited property. As per FBR's SRO 456(I)/2025, property inherited through succession is treated as a fresh acquisition for CGT purposes. The holding period clock starts from the date of the original owner's death, not from when the original owner purchased the property.

This means if a parent purchased a plot in 1990 and passed away in 2023, and you sell it in 2024 — your holding period is only 1 year (2023 to 2024), not 34 years. CGT applies at the 1–2 year rate. Always verify this with a registered tax practitioner, as this ruling has been subject to clarification and litigation.

CGT on Listed Shares — How It Works

Capital gains on shares listed on the Pakistan Stock Exchange (PSX) are handled differently from property:

• CGT on listed securities is collected automatically by NCCPL (National Clearing Company of Pakistan Limited) at the time of settlement — you do not need to calculate or pay it separately
• The CGT rate for shares is: 15% for under 1 year; 12.5% for 1–2 years; 10% for 2–3 years; 7.5% for 3–4 years; 5% for 4+ years
• Mutual fund capital gains may be taxed at different rates — check your fund house's tax treatment
• You must still declare CGT in your annual income tax return even though NCCPL has deducted it at source

How to Legally Minimise CGT in Pakistan

There are several completely legal strategies to reduce your CGT burden when selling property or assets:

• Hold property for 4+ years: The most straightforward exemption — immovable property held for 4 or more years is fully exempt from CGT. If you are at 3.5 years, waiting another 6 months saves 7.5% tax on your entire gain.
• Document all improvement costs: Every rupee spent on genuine improvements (construction, renovation, legal costs, brokerage) can be deducted from your capital gain. Keep all receipts and contractor agreements.
• File as an active taxpayer: Being on the ATL gives you lower withholding tax rates on property transactions beyond just CGT.
• Gift vs sale: Transfers by way of gift between close relatives (parent to child, between spouses) may be treated differently — consult a tax lawyer before structuring a family property transfer.