This guide sets out which transactions attract CVT, the current rates and the dates they took effect, how the tax is calculated, who is liable to pay it and who collects it. It also covers the exemptions, the payment process, and how CVT differs from capital gains tax and stamp duty. If someone has quoted you a 2% CVT on a property purchase in Punjab or Sindh, the jurisdiction section explains why that figure is out of date.
What Is Capital Value Tax in Pakistan?
CVT is a tax on the value of an asset, not on income earned from it and not on any profit made when it is sold. The amount depends on what the asset is worth or how big it is, regardless of whether it produced any return.
The current law is section 8 of the Finance Act 2022, titled Capital Value Tax 2022. The Federal Board of Revenue issued the procedural framework through the Capital Value Tax Rules 2022, notified as SRO 1797(I)/2022 on 29 September 2022. Those rules prescribe the declaration forms, the payment receipts and the appeal process.
CVT is not new. It was first imposed by the Finance Act 1989 and covered a much wider range of assets, including ordinary property transfers. That older regime was wound down over time and ceased to operate after the Tax Laws (Amendment) Ordinance 2020. The 2022 version is narrower and should not be read as a continuation of the 1989 rules.
The scope has changed twice since 2022. The Finance Act 2024 added farmhouses and large residential houses in Islamabad Capital Territory. The Finance Act 2026 removed foreign assets from the charge with effect from 1 July 2026.
Is Capital Value Tax Applicable Throughout Pakistan?
The federal CVT applies across Pakistan, but only to the assets section 8 actually lists. For immovable property the position is different, and it varies by province.
After the 18th Amendment, the power to tax the capital value of immovable property sits with the provinces rather than the federation, under Entry 50 of the Federal Legislative List. Islamabad Capital Territory has no provincial assembly, so Parliament legislates for it directly. That is why the only immovable-property CVT now charged by FBR applies in Islamabad and nowhere else.
Several provinces did levy their own CVT on property after 2010. Most have since removed it.
| Jurisdiction | CVT on immovable property | Legal position |
|---|---|---|
| Punjab | Not charged | Section 6 of the Punjab Finance Act 2010 was omitted by the Punjab Finance Act 2017 |
| Sindh | Not charged | Section 4 of the Sindh Finance Act 2010 was repealed in August 2020 by the Sindh Finance (Amendment) Act |
| Islamabad Capital Territory | Charged on large houses and farmhouses only | Section 8(2)(ab) and (ac) of the Finance Act 2022, inserted by section 12 of the Finance Act 2024 |
| Khyber Pakhtunkhwa | A provincial tax on the capital value of immovable property remains on the books | The rate was 2%, and the 2024 provincial finance bill proposed reducing it to 1%. Confirm the current rate with the KP Board of Revenue before relying on it |
| Balochistan | Position not confirmed here | Check with the Balochistan Board of Revenue |
If you are buying property in Lahore, Rawalpindi or Karachi, you are not paying CVT on that purchase. What you are paying is provincial stamp duty, a registration or transfer fee, any town or cantonment charge, and federal advance tax under sections 236C and 236K of the Income Tax Ordinance 2001. Agents and older online calculators often still describe one of these as CVT. Ask for the challan and check what the line item actually says.
Which Transactions Are Subject to Capital Value Tax?
Two categories are chargeable today, and a third was removed in 2026.
Motor vehicles held in Pakistan. CVT applies where the engine capacity exceeds 1300cc, or where an electric vehicle has battery power capacity above 50 kWh. It is charged at import, at first sale by a local manufacturer, at auction, and again on each transfer of registration while the vehicle still carries value for CVT purposes.
Farmhouses and large residential houses in Islamabad Capital Territory. A farmhouse of 2,000 square yards or more, and a residential house of 1,000 square yards or more, attract CVT based on area. The market value of the house makes no difference to the amount.
Foreign assets of resident individuals. This charge applied from tax year 2022 where foreign assets exceeded Rs 100 million in aggregate. The Finance Act 2026 abolished it with effect from 1 July 2026.
Ordinary purchases of a plot, a flat or a commercial unit do not attract federal CVT. Neither do shares, mutual fund units or other securities. Section 8 does allow the Federal Government to notify further assets by notification, subject to a rate cap, so it is worth checking current FBR notifications before concluding that an unusual asset is outside the charge.
Capital Value Tax Rates in Pakistan
Every rate below is tied to its legal provision and the date it took effect. Rates for different asset classes are not interchangeable.
| Asset | Rate | Valuation basis | Provision | Effective | Status |
|---|---|---|---|---|---|
| Motor vehicle above 1300cc, or electric vehicle above 50 kWh | 1% of value | Import value assessed by Customs including duties and taxes; ex-factory price including duties and taxes if locally made; auction value if auctioned | Section 8(2)(a), Finance Act 2022 | 1 July 2022 | In force |
| Farmhouse in ICT, 2,000 to 4,000 square yards | Rs 500,000 | Area | Section 8, Finance Act 2022 as amended by section 12, Finance Act 2024 | 1 July 2024 | In force, under challenge |
| Farmhouse in ICT above 4,000 square yards | Rs 1,000,000 | Area | As above | 1 July 2024 | In force, under challenge |
| Residential house in ICT, 1,000 to 2,000 square yards | Rs 1,000,000 | Area | As above | 1 July 2024 | In force, under challenge |
| Residential house in ICT above 2,000 square yards | Rs 1,500,000 | Area | As above | 1 July 2024 | In force, under challenge |
| Foreign assets of a resident individual above Rs 100 million | 1% of value | Cost, or fair market value where cost is not reliably known, converted at the State Bank rate for the last day of the tax year | Section 8(2)(b), Finance Act 2022 | Tax year 2022 | Abolished from 1 July 2026 by the Finance Act 2026 |
The value of a motor vehicle is reduced by 10% for each year from the end of the financial year in which it was acquired. After five years the value is treated as zero and no CVT is collected on a later transfer.
On the ICT levy, the Islamabad High Court restrained FBR from coercive recovery in early 2025 while a constitutional challenge proceeds. The petitioners argue that a charge based on the size of a house is a tax on immovable property, which the federation cannot impose after the 18th Amendment. The levy remains on the statute book while that is decided. Anyone assessed under it should take advice on their own position rather than assume it will be struck down.
How to Calculate Capital Value Tax
The method depends on which charge applies. The figures below are illustrations, not official assessments.
A new locally assembled car
A buyer purchases a 1800cc car assembled in Pakistan. The ex-factory price, including all duties and taxes, is Rs 8,000,000.
- Confirm the vehicle is in scope. Engine capacity exceeds 1300cc, so CVT applies.
- Take the ex-factory price as the value: Rs 8,000,000.
- Apply 1%: Rs 80,000.
The manufacturer or assembler collects the Rs 80,000 at the time of sale. Where the sale is on instalments, collection falls at the time of the first instalment.
The same car transferred later
Assume the car was acquired in financial year 2022-23 and sold privately three years after the end of that year.
- Start from the original value: Rs 8,000,000.
- Reduce by 10% for each elapsed year. Three years gives a 30% reduction, leaving Rs 5,600,000.
- Apply 1%: Rs 56,000.
The motor vehicle registering authority collects this when the registration is transferred. Count the years carefully from the end of the financial year of acquisition, because the figure changes each year and reaches zero after five.
A house in Islamabad Capital Territory
A residential house inside ICT measures 1,400 square yards. It falls in the 1,000 to 2,000 square yard band, so the CVT is Rs 1,000,000.
There is no percentage calculation here. The charge is a fixed amount tied to the size band, so a modest house and an expensive one of the same area pay the same. The tax is payable when the income tax return for the year is due.
Who Is Responsible for Paying CVT?
The person who bears the tax and the body that collects it are rarely the same. CVT on vehicles is almost always collected by someone else on FBR’s behalf.
| Situation | Who bears the cost | Who collects and deposits it |
|---|---|---|
| Imported vehicle | The importer | Collector of Customs, at the time of import |
| New vehicle bought from a local manufacturer | The buyer | The manufacturer or assembler, at the time of sale |
| Vehicle bought at auction | The successful bidder | The auctioneer |
| Vehicle registered or transferred, where CVT was not collected earlier | The person registering the vehicle | The motor vehicle registering authority of the provincial Excise and Taxation Department |
| Farmhouse or large house in ICT | The owner | Paid directly by the owner when the income tax return is due |
Registering authorities and manufacturers also have reporting duties. Under the Capital Value Tax Rules 2022, they file quarterly electronic statements in IRIS on the schedule set out in section 165(2) of the Income Tax Ordinance 2001. Collected amounts are deposited to the government treasury or through authorised branches of the State Bank of Pakistan or National Bank of Pakistan.
There is no general rule that the buyer always pays. On a private vehicle sale the parties often agree who funds the CVT, but the registering authority will look to the person applying for the transfer.
Exemptions and Cases Where CVT May Not Apply
Most of the time CVT does not apply because the asset falls outside the charge, not because an exemption has been claimed.
- Smaller vehicles. An engine capacity of 1300cc or less is outside the charge, as is an electric vehicle with battery power capacity of 50 kWh or less.
- Older vehicles. After five years from the end of the financial year of acquisition, the value is treated as zero, so no CVT arises on a later transfer.
- CVT already collected. Where CVT was collected from the same person at import, at purchase from a local manufacturer or at auction, the registering authority does not collect it again on that registration.
- Smaller properties in ICT. Residential houses under 1,000 square yards and farmhouses under 2,000 square yards are not within the ICT charge.
- Property outside ICT. No federal CVT applies to immovable property anywhere else in Pakistan.
- Foreign assets after 1 July 2026. The charge no longer exists going forward.
One point needs care. The abolition of the foreign-asset charge operates from 1 July 2026. It does not by itself extinguish an amount that had already fallen due for an earlier tax year. The constitutional validity of that charge for past years was still before the Federal Constitutional Court when the Finance Bill 2026 was presented. If you were assessed for CVT on foreign assets for tax year 2022 to tax year 2026, treat your position as open and take advice on it.
How to Pay Capital Value Tax in Pakistan
The process depends on which charge applies to you.
For a vehicle, you usually do not make a separate payment. The tax is built into what you pay at import, at purchase or at the registration counter. Ask for the computerised payment receipt and keep it, because it is the evidence that CVT was collected and the reason it will not be charged again at the next step.
For a farmhouse or large house in ICT, the tax is paid by the owner when the income tax return for the year is due, in the manner prescribed under the Capital Value Tax Rules 2022. Declarations under those rules are filed electronically in IRIS.
If an amount has been collected from you in error, for example on a vehicle past the five-year point, the Capital Value Tax Rules 2022 provide for refunds and for revision and appeal. Raise it promptly rather than at the next transfer.
Do not rely on third-party calculators for the figure. Several of the ones ranking for CVT searches still apply a flat 2% to a property’s fair market value, which has no basis in current law.
Documents Required for Capital Value Tax
Requirements vary by authority and by transaction, so confirm what your Excise and Taxation office or tax adviser asks for. In practice you should expect to need:
- CNIC of the person in whose name the asset is being registered or declared
- For an imported vehicle, the import documents and the customs assessment showing the value
- For a new vehicle, the manufacturer’s sale invoice showing the ex-factory price
- For a transfer, the registration book and the transfer documents
- The computerised payment receipt for any CVT already collected
- For an ICT property, documents establishing the area of the house or farmhouse
- Your NTN and income tax return details where the tax is paid with the return
Capital Value Tax vs Capital Gains Tax vs Stamp Duty
These three are often spoken about as if they were one charge. They are separate taxes with separate laws, separate triggers and separate collecting authorities.
| Capital Value Tax | Capital Gains Tax | Stamp Duty | |
|---|---|---|---|
| What is taxed | The value or the size of a specified asset | The profit made on disposal | The execution of an instrument |
| Trigger | Import, purchase, registration or transfer of a qualifying vehicle, and ownership of a large house or farmhouse in ICT | Selling a capital asset for more than it cost | Executing and registering a document such as a conveyance or gift deed |
| Law | Section 8 of the Finance Act 2022 | Income Tax Ordinance 2001 | Stamp Act 1899, as applied and amended by each province |
| Who is liable | The importer, buyer or owner, depending on the charge | The seller | Usually the buyer, by commercial agreement |
| How it is worked out | A percentage of value, or a fixed amount by area | Computed on the gain, with the rate depending on the asset and when it was acquired | A percentage of the official valuation |
| Collected by | Customs, the manufacturer, the auctioneer, the registering authority, or paid with the return | FBR, through the return and advance tax collection | The provincial revenue authority, usually through e-stamping |
Whether more than one of these applies depends on the asset and the jurisdiction. A property transfer in Punjab can involve stamp duty, a registration fee, advance tax under sections 236C and 236K, and capital gains tax for the seller, with no CVT at all. A vehicle purchase can involve CVT and advance tax but no stamp duty.
Sellers should also check the capital gains tax treatment of property disposals, which depends on when the property was acquired. Owners pay a separate annual provincial property tax on top of anything charged at the time of transfer.
Common Mistakes When Dealing With CVT
Treating a 2% property CVT as current. Punjab removed its CVT on immovable property in 2017 and Sindh in 2020. Quotes that still include it are usually describing stamp duty or a transfer fee under the wrong name.
Confusing CVT with capital gains tax. CVT is charged on value. Capital gains tax is charged on profit. A loss-making sale can still involve no CVT and no gains tax, or CVT and no gains tax, depending on the asset.
Assuming the 2026 abolition clears the past. Removing the foreign-asset charge from 1 July 2026 does not automatically settle an assessment for tax year 2023.
Paying twice on a vehicle. If CVT was collected at import or at first purchase, it should not be collected again at registration. The computerised payment receipt is what prevents that, so keep it.
Miscounting the five-year window. The count runs from the end of the financial year in which the vehicle was acquired, not from the purchase date or the model year.
Assuming the ICT levy follows value. It follows area. A 1,100 square yard house attracts the same CVT as a far more expensive house of the same size.
Frequently Asked Questions About Capital Value Tax
What is Capital Value Tax in Pakistan?
It is a federal tax on the value of specified assets, charged under section 8 of the Finance Act 2022. It currently applies to larger motor vehicles and to large houses and farmhouses in Islamabad Capital Territory.
What does CVT stand for?
Capital Value Tax.
Is CVT still applicable in 2026?
Yes, for motor vehicles and for qualifying ICT properties. The charge on foreign assets of resident individuals was abolished with effect from 1 July 2026.
What is the current CVT rate?
There is no single rate. Motor vehicles are charged at 1% of value. ICT farmhouses and residential houses are charged fixed amounts between Rs 500,000 and Rs 1,500,000 depending on area.
Who pays CVT in Pakistan?
The importer, buyer or registering person for a vehicle, and the owner for a qualifying ICT property. Collection is handled by Customs, the manufacturer, the auctioneer or the registering authority.
Is CVT the same as capital gains tax?
No. CVT is charged on the value of an asset. Capital gains tax is charged on the profit made when an asset is sold.
Is CVT applicable in Islamabad?
Only on farmhouses of 2,000 square yards or more and residential houses of 1,000 square yards or more. It is not a general charge on Islamabad property transfers.
Do CVT rules differ between provinces?
The federal CVT is the same everywhere. Provincial CVT on immovable property differs: Punjab and Sindh no longer charge it, and Khyber Pakhtunkhwa retains a provincial charge whose current rate should be confirmed with the KP Board of Revenue.
Do I pay CVT when I buy a plot in Lahore or Karachi?
No. You will pay stamp duty, a registration or transfer fee and federal advance tax, but not CVT.
How can I check what applies before a transfer?
Identify the asset, the jurisdiction and the date, then check the charge against section 8 of the Finance Act 2022 and the relevant provincial law. Ask the collecting office for the challan breakdown before paying.
What to Do Next
If you are buying or transferring a vehicle, ask for the computerised payment receipt and check whether CVT has already been collected further up the chain. If you own a large house or farmhouse in Islamabad, raise CVT with your tax adviser before the return deadline rather than after an assessment. If you were charged CVT on foreign assets for an earlier tax year, your position may still be open.
For help reviewing a specific transaction, see our taxation services or contact our team.