How to Calculate Capital Gain Tax on Property in Pakistan, Easy Steps

By Xtremes Marketing | Published Mar 2 2022 5:39AM

How to Calculate Capital Gain Tax on Property in Pakistan

Capital Gain Tax (CGT) is not a federally imposed tariff on the real estate industry but a local tariff imposed on all property dealings across the major cities of Pakistan. Here in this article, we will discuss How to Calculate Capital Gain Tax on Property in Pakistan.There is a net 5 percent capital gain tax (CGT) is imposed on all types of property in Pakistan. According to the record of dealings related to a single real estate, there are some procedures and exemptions to the Capital Gain Tax (CGT). The person on the selling end of the real estate dealings should be bound to pay 1 percent of the capital if he’s a tax filer. In a scenario where the seller is a non-filer, it's supposed to pay 2 percent of the total capital in the form of the capital gain tax (CGT). Along with the capital gain tax (CGT), every seller and buyer of real estate should also know more about stamp duty.

capital gain tax on property in Pakistan

Why is there a Capital Gain Tax (CGT) on Property in Pakistan

Real estate in Pakistan contributes to 2 percent of the country's total gross domestic product (GDP). Several housing societies inside Pakistan offer the best services to the inhabitants. There are standard facilities provided to the residents of these best housing societies across the major cities of Pakistan. Capital Gain Tax (CGT) is imposed on all property dealings processed inside Pakistan. Real estate is growing with a high attraction from investors and local customers. The public requires an eco-friendly, lavish, and secure housing society in Pakistan. Pakistan is an underdeveloped country; most of its gross domestic product (GDP) depends upon the agricultural industry and other specified exports. The addition of real estate to Pakistan's gross domestic product (GDP) offers new opportunities to local and international investors. According to the Finance Act, 2006 in the constitution of Pakistan 2 percent of the Capital Gain Tax (CGT) and 3 percent of the stamp duty non-avoidable tariff imposed on any real estate dealing inside Pakistan.

Learn about how to pay Stamp Duty Tax inside Pakistan

Stamp Duty is a very understood and feasible tariff imposed on every buyer when processing legal documentation. Stamp duty is imposed under the Stamp Act of 1899, which makes it about 3 percent of the DC rates of the real estate capital.If you are either a buyer or seller and looking for the best possible way to calculate the, you should immediately visit the excise taxation and narcotics control department, the government of Sindh, and the government of Punjab. They have all the relevant tools and filters set up for your use, making it possible to calculate and estimate the capital gain tax (CGT) on property in Pakistan. Also offering enough information related to the stamp duty as per the real estate deal under process.

capital gain tax on property

What to know more about Capital Value Tax (CVT)?

Another important yet hard-to-understand term comes: the WHT Tax or simply advance tax adjusted into the property buyer's liabilities and against the person's Capital Gain Tax CGT (also known as the Capital Value Tax (CVT)). According to the highlighted policies, those buyers and sellers who are dealing with real estate dealings worth more than PKR 4 million have to pay the WHT Tax.

Directorate of Immovable Property (DGIP)

The government of Pakistan has assigned the task of monitoring the mapping of real estate having a record of the housing etc., to the Directorate of Immovable Property (DGIP). Some of the essential tasks carried out by the Directorate of Immovable Property (DGIP) are as below:

Geo-Mapping of Plots
Apartments and All Kinds of Housing Schemes and Projects.
Valuation of Properties, and areas of real estate where tax evasion is a possibility - especially while collecting Withholding Taxes.

How to Calculate Capital Gain Tax on Property in Pakistan