Section 236K: advance tax when you buy property
Section 236K is the tax a buyer discovers at closing, often after the budget has already been agreed. It is collected by the person registering or attesting the transfer, on the fair market value of the property, and the rate depends entirely on whether the buyer is on the Active Taxpayer List that day.
Tax Year 2027 rates
| Buyer status | Rate | Base |
|---|---|---|
| Active taxpayer | 1.25% | Fair market value |
| Inactive taxpayer | 10.5% | Fair market value |
The Finance Act 2026 reduced the active rate from 3% to 1.25% as a measure to stimulate construction activity. The inactive rate was not reduced, so the gap widened to 9.25 percentage points.
What that means at real transaction sizes
| Fair market value | Active buyer | Inactive buyer | Cost of being off the list |
|---|---|---|---|
| Rs 5,000,000 | Rs 62,500 | Rs 525,000 | Rs 462,500 |
| Rs 15,000,000 | Rs 187,500 | Rs 1,575,000 | Rs 1,387,500 |
| Rs 30,000,000 | Rs 375,000 | Rs 3,150,000 | Rs 2,775,000 |
| Rs 75,000,000 | Rs 937,500 | Rs 7,875,000 | Rs 6,937,500 |
You bought or sold property this year, tax was deducted at the time of registration, and nobody explained whether you get it back.
The base is fair market value, not your agreement
This is where budgets break. The collection is computed on fair market value as accepted for the transfer, which may exceed the consideration stated in the sale agreement. Before committing:
- Establish the valuation the registering authority will apply for the specific locality and property type.
- Model closing costs on that figure, not on the negotiated price.
- Remember that stamp duty, registration fee, capital value tax and any local charges sit on top of section 236K.
- If the property is being bought jointly, confirm how the collection is apportioned and whose status applies to which share.
Section 236K is not the only cost at closing
Buyers budget for the advance tax and are then surprised by the total. Depending on the province, the property type and the transaction, a purchase can attract several charges at or around transfer:
- Stamp duty, levied provincially on the instrument, at rates set by the province.
- Registration fee charged by the registering authority.
- Capital value tax, where applicable to the transaction.
- Local or municipal charges, which vary by jurisdiction and by development authority.
- Society or authority transfer fees for property inside a scheme, which are contractual rather than statutory but frequently substantial.
Section 236K is a federal income tax collection. The others are separate levies under separate laws, and none of them is creditable against your income tax. Ask the registering authority or your lawyer for the complete schedule for the specific locality before you commit to a closing date, because the aggregate can materially change the deposit you need.
Making sure you can actually use the credit
A collection you cannot evidence is a collection you cannot claim. Three practical requirements:
- The challan must carry your own CNIC or registration. Deposits made against an agent, a family member or the seller do not attach to your position.
- Retain the challan, the transfer deed and the valuation basis together. These belong in the tax-year file, not in the property file.
- Declare the property in the wealth statement for the year of acquisition, with the funding source traced. A property purchase is one of the most visible events in an FBR data set, and an acquisition that does not reconcile to declared income or documented funding invites a notice. See the wealth statement guide.
236K is not your capital gains position
Buyers routinely conflate the two. Section 236K is an advance collection at purchase. Capital gains tax arises later, on disposal, computed from consideration less cost. The cost you establish today — purchase price, and the documentation supporting it — determines the gain calculated when you eventually sell. Keep the acquisition file intact for that reason alone. Property capital gains explains how the two connect.
Errors that cost money at closing
- Checking ATL status a month before the transfer. Status is applied on the transaction date.
- Budgeting on the agreement price when the registrar will use a higher valuation.
- Letting the deposit be made against the wrong person, which strands the credit.
- Treating the collection as a sunk cost without checking whether it is adjustable.
- Buying in a family member's name to reduce the rate, which creates a wealth statement problem for two people and does not survive scrutiny.
Sources
This guide is written against the official and clearly labelled professional references below. Rates, thresholds and portal procedures change between reviews, so open the primary source before relying on a figure.
- Withholding Tax Rate Cards (FBR)
- Tax Year 2027 withholding rate summary (KPMG Pakistan)
- Finance Act 2026 (FBR)
- Active Taxpayer List — Income Tax (FBR)
Questions people also ask
Is section 236K charged on the price I paid or on a government value?
On fair market value as accepted for the transfer, which is frequently not the price written in the agreement. Where the value adopted by the registering authority exceeds the stated consideration, the higher figure generally drives the collection. Establish which value the registrar will use before you budget for closing costs.
Who physically pays and deposits the 236K amount?
It is collected from the buyer, and the person registering or attesting the transfer is responsible for collecting and depositing it. In practice the buyer funds it at closing. Ensure the challan carries your own registration details, because a collection deposited against someone else is very difficult to claim later.
Do I get this money back?
It depends on whether the collection is adjustable or final under the statutory conditions applicable to your case. Where it is adjustable, it becomes a credit against your annual liability and can produce a refund. Confirm the character before you treat it as either a cost or an asset.
Does 236K apply to inherited or gifted property?
Transfers that are not purchases can fall outside the charge or be treated differently, but the treatment depends on the nature of the transfer, the relationship of the parties and the documentation. Do not assume an exemption from the label alone — get the specific transfer reviewed before it is registered.
Both 236K and 236C were charged on my transaction. Is that right?
Usually yes. They are different sections applying to different parties in the same transaction: 236K is collected from the buyer on fair market value, 236C from the seller on consideration received. A single transfer can therefore generate both collections.
Send the tax year and the transaction or filing involved, and we will tell you what is actually required.
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