Capital Gain Tax on Property in Pakistan 2025
The real estate taxation landscape in Pakistan witnessed a major change in 2024 with the introduction of a flat 15% CGT on capital gains on real estate transactions. This change, effective from July 1, 2024, replaced the long-standing tiered tax structure that previously encouraged long-term ownership of real estate.
As we move into 2025, understanding how these new tax laws affect your real estate investment decisions is more important than ever. In this guide, we will detail what capital gains tax is, how the new capital gain tax on property 2025 system works, its impact on filing versus non-filers, and what it means for the future of the real estate market in Pakistan.
What is FBR Gains Tax on Property
Capital Gain Tax on Property is a tax imposed on the profit earned from the sale of capital assets such as property, stocks, and bonds. In the context of real estate, CGT is calculated on the net gain from the sale of a property. This means: Capital Gain = Selling Price – Purchase Price If the result is a positive number, the gain is taxable.
Example
Let us say you bought a residential plot for PKR 6 million in 2022 and sold it for PKR 9 million in 2025. The profit capital gain of PKR 3 million will be subject to Capital Gains Tax if the property was acquired on or after July 1 2024.
Historical Overview of capital gain tax on properties in pakistan
Before the reforms, Pakistans CGT system was based on a holding period. The longer you held the property, the less tax you paid.
Previous CGT Tax Structure Based on Holding Period
| Holding Period | Tax Rate Percent |
| Less than 1 year | 15 |
| 1 to 2 years | 12.5 |
| 2 to 3 years | 10 |
| 3 to 4 years | 7.5 |
| 4 to 5 years | 5 |
| More than 5 years | 0 |
This structure was intended to encourage long-term investment in the property market and curb short-term speculative trading.The New CGT Policy 2025 – What Changed
From July 1 2024 onwards, a flat 15 percent Capital Gains Tax applies to all immovable property gains if the property was acquired on or after this date. The goal is to simplify the system, increase compliance, and reduce tax evasion.
Summary of Key Changes
| Feature | Old Regime | New Regime (2025) |
| Tax Based On | Holding period | Fixed flat rate |
| Tax Rate | Variable 0 to 15 percent | Flat 15 percent |
| Property Acquisition Date | Before July 1 2024 | On or after July 1 2024 |
| Requirement | Filer or non-filer | Must be on ATL for flat rate |
| Progressive Rate | Yes | Only for non-filers |
Capital Gains Tax Calculation Example (2025)
| Description | Amount (PKR) |
| Property Purchase Price | 5000000 |
| Property Sale Price | 7500000 |
| Capital Gain | 2500000 |
| CGT Rate (Filer) | 15 percent |
| Tax Payable | 375000 |
Under the flat rate system, a filer selling a property with a PKR 2500000 gain will pay a fixed CGT of PKR 375000 regardless of how long the property was held.
Difference Between Filer and Non-Filer CGT
| Category | Filer | Non-Filer |
| CGT Rate | Flat 15 percent | Minimum 15 percent, can be progressive |
| ATL Requirement | Must be on ATL | Not eligible for flat rate |
| Filing Status | Tax returns filed | Tax returns not filed |
| Risk | Lower tax liability | Higher tax burden and audit exposure |
Being on the Active Taxpayer List ATL is now essential for availing the 15 percent flat rate benefit.
Advance Tax Under Sections 236C and 236K
Apart from CGT, the property market also imposes advance income tax at the time of sale or purchase under the Income Tax Ordinance.
| Section | Who Pays | Tax Base | Filer Rate | Non-Filer Rate |
| 236C | Seller | Gross Sale Value | 3 percent | 6 percent |
| 236K | Buyer | Purchase Value | 3 percent | 7 percent |
These advance taxes are adjustable at the time of filing income tax returns. Estimate your taxes easily with our income tax calculator—fast, accurate, and user-friendly for individuals and businesses. Plan smarter finances today!.However, non-filers who do not file returns may lose this benefit.
Impact of New CGT Policy on Property Investors
Change in Investment Approach
With no tax benefit for long-term holding, investors may shift toward quicker transactions and short-term returns. However, this could also lead to reduced stability in property pricing.
Impact on Small vs Large Investors
Smaller investors who previously relied on long-term holding to reduce CGT now face the same rate as wealthier investors. This could result in a relative loss for small-scale players.
Market Transactions May Slow Down
The flat tax rate may discourage some investors from selling, especially if their anticipated gains are marginal. Fewer listings could affect property liquidity in cities like Lahore, Karachi, Islamabad, and emerging urban centers.
Government Revenue Boost
According to FBR estimates, the 15 percent flat tax could generate an additional PKR 6 billion annually. It aims to reduce administrative burden while increasing compliance.
Potential Challenges and Criticism
| Challenge | Description |
| Equity Concerns | Flat tax impacts small and large investors equally |
| Filing Complexity | Non-filers face a more complicated and costly process |
| Risk of Speculation | Short-term buying and selling may lead to market instability |
| Perceived Unfairness | Those who held properties for years now face higher tax burden |
| ATL Pressure | Pushes everyone to become filers, but many find the process bureaucratic |
Tips to Navigate Property Taxation in 2025
| Tip | Why It Matters |
| Register on ATL | To qualify for the 15 percent flat rate |
| Maintain Sale and Purchase Records | Documentation helps in audits and adjustments |
| File Annual Returns | Ensures adjustability of advance taxes |
| Work With a Tax Advisor | Professional help can save time and money |
| Monitor Property Values | Make decisions based on after-tax ROI |
| Understand Tax Deductions | Some costs may be deductible with proper proof |
FAQ’S
1. What is Capital Gain Tax on property in Pakistan?
Capital Gains Tax is a tax on the profit earned from selling a property.
2. What is the current CGT rate in 2025 for property in Pakistan?
As of 2025, a flat 15% CGT applies to properties acquired on or after July 1, 2024, for ATL filers.
3. Who qualifies for the 15% flat CGT rate?
Only individuals listed on the Active Taxpayers List (ATL) qualify for the 15% flat rate.
4. Are advance taxes also applicable during property transactions?
Yes, both buyers and sellers must pay advance income tax under Sections 236C and 236K.
