Is property tax charged on the price in my sale deed or on the FBR valuation table?

For income tax purposes, the price written in your sale deed is only a floor if it is higher than the official value. If it is lower, the Income Tax Ordinance, 2001 replaces it with the official figure. This page explains how section 68 sets that figure and where it is used. Rates quoted are those in force for tax year 2027 (1 July 2026 to 30 June 2027).

What does the law say?

Section 68 defines “fair market value”. For most assets, section 68(1) says it is the price the asset “would ordinarily fetch on sale or supply in the open market” at the time. Immovable property has its own rules:

• Section 68(4): the Board (FBR) may, by notification in the official Gazette, determine the fair market value of immovable property in the areas it specifies. These notifications are what people call the FBR valuation table.
• Section 68(5): where FBR has not notified a value for an area, the fair market value is deemed to be the value fixed for stamp duty by the District Officer (Revenue) or another authorised provincial authority.
• Section 68(6): for immovable property, four values “shall not be less than” the fair market value under sub-section (4) or (5):
  1. component A (the sale consideration) in the capital gain formula in section 37(2);
  2. the “consideration received” on which 236C advance tax is charged under Division X;
  3. the “value of immovable property” for Division XVIII, the 236K rate;
  4. valuation for section 111, which deals with unexplained income or assets.

Two Explanations follow. The first says the section 68(4) or (5) value is for the purposes of this Ordinance only. The second says that if that value differs from an auction price, “the applicable price shall be the higher of the two.”

How does it work in practice?

The registrar, society or other authority that records the transfer collects 236C from the seller and 236K from the buyer. For tax year 2027, the First Schedule, Part IV sets:

Tax	Collected from	Rate (tax year 2027)	Base
Section 236C	Seller	2.75%	Gross amount of the consideration received
Section 236K	Buyer	1.25%	Fair market value of the immovable property

Because of section 68(6), a deed that understates the price does not reduce either base below the notified value. The same floor applies later when the seller works out the capital gain for the return, and when the Commissioner values an investment under section 111. These rates are for persons on the active taxpayers’ list. Higher rates for others are covered on the non-filer rate page.

Worked example (illustrative figures)

Ayesha sells a plot in Lahore to Bilal. The deed shows Rs. 18,000,000. The FBR notified value for that plot is Rs. 25,000,000. Ayesha bought it for Rs. 15,000,000. Both are on the active taxpayers’ list.

236C on Ayesha (seller)

• Base cannot be less than Rs. 25,000,000
• Rs. 25,000,000 x 2.75% = Rs. 687,500
• (On the deed price it would have been Rs. 18,000,000 x 2.75% = Rs. 495,000)

236K on Bilal (buyer)

• Base cannot be less than Rs. 25,000,000
• Rs. 25,000,000 x 1.25% = Rs. 312,500

Capital gain for Ayesha’s return

• Component A cannot be less than Rs. 25,000,000
• Gain = A - B = Rs. 25,000,000 - Rs. 15,000,000 = Rs. 10,000,000
• On the deed price, the gain would have looked like Rs. 3,000,000.

The capital gain is then taxed at the rates in Division VIII of Part I of the First Schedule, which depend on when the property was acquired. See the capital gains pages linked below.

What if the property was bought at auction?

The second Explanation to section 68(6) applies. If a plot sold at auction for Rs. 27,000,000 has an FBR value of Rs. 25,000,000, the higher figure, Rs. 27,000,000, is used. 236K would then be Rs. 27,000,000 x 1.25% = Rs. 337,500, and 236C would be Rs. 27,000,000 x 2.75% = Rs. 742,500.

What if the deed price is higher than the FBR value?

Section 68(6) only sets a minimum. For 236C, Division X uses the “gross amount of the consideration received”, so a real price above the FBR value is the base. For 236K, the current wording of Division XVIII uses “fair market value”, and section 68(4) says the notified value applies “notwithstanding” sub-section (1). The text does not expressly say whether a higher agreed price replaces the notified value for 236K. That point is not settled by the wording alone.

Common mistakes

• “Tax follows the deed.” Not when the deed is lower. Section 68(6) overrides it for the four listed purposes.
• “The DC rate always applies.” The stamp duty value under section 68(5) is only the fallback where FBR has not notified a value for the area.
• “A low FBR value lowers my stamp duty too.” The first Explanation limits the section 68 value to the Income Tax Ordinance.
• Forgetting section 111. If the price actually paid is above what was declared, section 111 deals separately with unexplained investments. Section 68(6)(iv) sets the floor for that valuation too.

What to check in the official text

Read section 68(4) to (6) with both Explanations, and Divisions X and XVIII of Part IV of the First Schedule in the consolidated Ordinance amended to 30 June 2026. The FBR valuation notifications for each city are separate SROs that this site does not hold. Check the notification in force for your area and the date of transfer. Provincial stamp duty valuation tables are also outside this corpus.