FBR Revises Islamabad Property Valuations by Up to 75 Percent: What SRO 163(I)/2026 Means for Buyers and Sellers

On 2 February 2026, the Federal Board of Revenue (FBR) issued SRO 163(I)/2026, replacing the earlier valuation tables notified under SRO 2392(I)/2025 with substantially revised fair market valuations for immovable properties in the Islamabad Capital Territory (ICT). The new notification increases property valuations across most sectors of the city by between 15 and 75 per cent. For anyone buying, selling, or holding property in Islamabad, this change has direct consequences for the amount of tax payable on property transactions, capital gains, and withholding obligations.

Background: Why FBR Revises Property Valuations

Under Section 68 of the Income Tax Ordinance 2001, the FBR has the authority to determine the fair market value (FMV) of immovable properties for tax purposes. These FMV tables are used as the minimum benchmark for computing taxes on property transactions, including advance tax under Section 236C (collected from sellers) and Section 236K (collected from buyers), as well as capital gains tax under Section 37 and withholding tax on rental income.

The FBR periodically revises these valuations to bring them closer to actual market prices. The gap between FBR-notified values and real market prices has historically been significant, sometimes as wide as five to ten times. This gap has facilitated under-declaration of property values, enabling tax evasion on a large scale. The revision under SRO 163(I)/2026 is part of the government's ongoing effort to close this gap, improve tax collection from the real estate sector, and document the economy.

The previous attempt at revision under SRO 2392(I)/2025 met strong resistance from real estate stakeholders, property dealers, and housing societies. The FBR suspended that notification until 31 January 2026 to allow for consultations. The current SRO 163(I)/2026 is the result of those consultations and represents a revised set of values that the FBR considers workable.

Key Changes Under SRO 163(I)/2026

The most prominent change is the increase in per-marla and per-kanal rates across various sectors and housing schemes in Islamabad. Valuations have increased by 15 per cent in some areas and by as much as 75 per cent in others, depending on the location and category of property. The increases are not uniform; they reflect the FBR's assessment of relative market values in different parts of the city.

Superstructure rates have been standardised. For buildings up to five years old, the notified rate is Rs. 3,000 per square foot. For structures older than five years, the rate is Rs. 1,500 per square foot. This applies to residential and commercial buildings alike and is intended to account for the built-up value of property, which was previously undervalued or ignored in many transactions.

A notable feature of SRO 163(I)/2026 is the exclusion of Defence Housing Authority (DHA) Islamabad from the new valuation tables. DHA properties will continue to be assessed under the previously notified values. This exclusion was reportedly the result of representations made by DHA and its residents. The FBR has indicated that a separate notification may be issued for DHA at a later date.

For rural areas within the ICT, the valuation will follow determinations made by the Additional Deputy Commissioner (Revenue) or the District Collector. Where there is a discrepancy between the two, the higher value will apply.

Tax Impact on Property Transactions

The revised valuations will directly affect the tax payable on every property transaction in Islamabad. The most immediate impact is on the advance tax collected at the time of sale and purchase. Under Section 236C of the Income Tax Ordinance, the seller of immovable property is liable to pay advance tax at the time of registration. Under Section 236K, the buyer is similarly liable. Both taxes are computed as a percentage of the declared consideration or the FBR's notified value, whichever is higher.

With FBR values increasing by 15 to 75 per cent, the minimum tax base for these transactions has risen correspondingly. A property that was previously valued at Rs. 2 crore for FBR purposes may now be valued at Rs. 2.5 crore or more. This means higher advance tax for both buyer and seller, even if the actual transaction price remains unchanged.

Capital gains tax is also affected. Under Section 37 of the Income Tax Ordinance, capital gains on the disposal of immovable property are taxed at rates that vary depending on the holding period. The gain is calculated as the difference between the sale consideration and the cost of acquisition, with the FBR's notified values serving as the floor. Higher notified values on the acquisition side may, in some cases, reduce the taxable gain for sellers who purchased at the new higher values. However, for properties purchased under the old lower values and sold after the revision, the taxable gain will be larger.

Withholding tax on rental income, collected under Section 155, is generally based on the actual rent received and is not directly tied to the FBR's property valuation tables. However, the FBR may use the revised valuations as a cross-check when assessing whether declared rental income is reasonable relative to the property's value.

Subsequent Amendments: SRO 256(I)/2026 and SRO 332(I)/2026

The initial notification was followed by two amendments. SRO 256(I)/2026, issued on 11 February 2026, revised downward the valuations for the area of Adalat Garha, correcting what was acknowledged to be an overvaluation in the original notification. SRO 332(I)/2026, issued on 24 February 2026, further amended the tables by updating the rates for Naval Anchorage and for agricultural, poultry, and vegetable farms in the ICT.

These amendments confirm that the FBR is responsive to stakeholder feedback and willing to correct errors. They also mean that taxpayers and practitioners need to check the current version of the valuation tables before completing any transaction, as the rates may have changed since the original notification was issued.

Practical Advice for Property Buyers and Sellers

If you are planning to buy or sell property in Islamabad, the first step is to check the current FBR-notified value for the relevant sector, scheme, or area. The FBR maintains a property valuation tool on its website at fbr.gov.pk/propertyValuation. Your tax advisor or legal counsel should verify the applicable rates before the transaction is registered.

Buyers should factor the higher valuation into their overall cost calculations. The advance tax payable under Section 236K will be higher under the new rates, and this needs to be budgeted for at the time of registration. Sellers should likewise calculate their advance tax liability under Section 236C and their potential capital gains exposure before agreeing to a sale price.

For those holding property and not planning an immediate transaction, the revised valuations do not create any additional tax liability on their own. Property tax in Islamabad is administered by the Capital Development Authority (CDA) and the Metropolitan Corporation Islamabad, and their assessment criteria are separate from the FBR's income tax valuations. However, if you are required to declare assets in your annual income tax return or wealth statement, the FBR-notified values may be used as a reference point.

Finally, if you hold property in DHA Islamabad, note that the DHA exclusion applies only for the time being. The FBR has indicated that separate valuations for DHA may be notified in due course. It would be prudent to anticipate an increase and plan accordingly.

For advice on property taxation, capital gains planning, or FBR compliance, contact LexForm for a confidential consultation.