PAKISTAN PROPERTY TAX – BUDGET 2022/2023

As per Pakistan Government new budget and revised tax on real estate, below are guidelines;

1. 1% Property Tax On Properties Worth More Than 25 Million Rupees

Anyone who owns a property worth more than Rs 25 Million or 2.5 Crore, it will be considered that your income is 5% rental income, and 1% tax will be levied against you according to the fair market value. However, the house, whatever its value, in which you are currently living, is exempt from this tax. This exemption is important because it ensures that people are not taxed on their primary residence. Without this exemption, many people would be unable to afford to keep their homes. 

2. Advance Tax

The new budget includes an increase in the tax rate for filers from 1% to 2%. Non-filers, who were currently subjected to a 2% penalty, will see their tax rate increased to 5%. This is to degrade non-filers and make it more difficult for them to remain outside the tax network. The hope is that by making it more difficult for non-filers, they will be forced to become registered filers. This may not be an easy task, as many non-filers are likely to find ways to avoid the increased penalties. However, if the government can succeed in getting more people to enter the tax network, it will be a major victory for tax reform.

3. Capital Gains Tax

The current government has extended the period of time during which capital gains tax is not payable on a property from four years to six years. This will reduce the frequency of property transactions, as people will be more likely to hold onto their properties for longer. This is in order to encourage people to invest their money in productive areas rather than simply holding onto it in non-productive assets.

TAX ON BUYING AND SELLING OF IMMOVABLE PROPERTY

Capital gains on disposal of immovable property will be taxed as per the following: