Published by: S&B Advisors and Consultants (Private) Limited
Author: Ms. Saima Morkas
Date: August 3, 2025
📌 Introduction
Capital Value Tax (CVT) is a transaction-based tax imposed on the acquisition or transfer of capital assets. In Pakistan, CVT is levied under the Finance Act and administered by the Federal Board of Revenue (FBR), as well as provincial tax authorities in certain contexts. The primary objective of CVT is to document high-value asset transactions and mobilize tax revenue from the wealthy asset-owning segments of the population.
In recent years, the scope and enforcement of CVT have expanded significantly, particularly after the Finance Acts of 2022 and 2025.
⚖️ Legal Framework
CVT is governed under the Finance Act, 1989, with regular amendments introduced via the Finance Acts of respective fiscal years. For current purposes, the Finance Act, 2025 remains the operative legislation.
It is important to distinguish between:
- Federal CVT: Administered by FBR, applies to movable assets like vehicles and foreign assets.
- Provincial CVT: Levied on immovable property under Punjab, Sindh, KP, and Balochistan laws.
🔍 Applicability of CVT in Pakistan
CVT applies to the acquisition, transfer, or ownership of certain capital assets, including:
1. Immovable Property (Land & Buildings)
- CVT is charged on purchase or transfer of property located in urban areas.
- Applicable in Punjab and Sindh under their respective stamp acts.
| Jurisdiction | CVT Rate | Property Type | Additional Notes |
| Punjab | 2% | Urban immovable property | Charged on declared value |
| Sindh | 2% | Urban property & flats | Collected via SRB |
| KP, Balochistan | Varies | Urban properties | Less common, check local laws |
Note: In most cases, CVT is paid by the buyer at the time of registration.
2. Motor Vehicles
Under the Finance Act, 2022 (updated 2025), CVT is applicable on acquisition of motor vehicles exceeding specified engine capacities or value thresholds.
| Vehicle Type | CVT Rate | Applicability |
| Vehicles > 1300cc | 1% | Based on import value or invoice price |
| Electric Vehicles | 1% | On invoice value |
| CVT Exemptions | — | Locally manufactured vehicles < 1300cc |
Collected by: FBR at the time of registration with Excise Departments.
3. Foreign Assets of Resident Pakistanis
Introduced in Finance Act, 2022, CVT applies to resident individuals owning foreign assets.
| Criteria | CVT Rate |
| Value of foreign assets > Rs. 100 million | 1% |
- Assessed as of June 30 each year.
- Payable by September 15.
- Applies to assets like foreign real estate, bank balances, securities, etc.
4. Stock Market Transactions (Withdrawn)
- CVT on stock exchange trading was previously levied under Section 236M/N but abolished.
- However, capital gains on securities are taxed under CGT, not CVT.
💡 Who Pays CVT?
| Asset Type | Payer |
| Property | Buyer |
| Vehicles | Buyer |
| Foreign Assets | Resident Individual |
| Joint ownership | Proportionate liability applies |
🧾 Mode of Payment
- Through Challan (CPR) in designated banks
- Collected by FBR (Federal) or Board of Revenue / SRB (Provincial)
- Non-payment may attract penalties and disallowance in registry processes
📑 CVT vs. Other Taxes
| Tax Type | Basis | Applicability |
| CVT | Value of asset | One-time on transfer/acquisition |
| CGT (Capital Gains Tax) | Profit on sale | At time of disposal |
| Stamp Duty | Legal documents | Transfer of property titles |
| Advance Tax (236K) | Purchase price | Real estate transactions |
CVT is in addition to stamp duty, registration fee, and withholding taxes on property/vehicle purchases.
🔍 Recent Developments (2025-26 Budget)
- No change in CVT rate on foreign assets or vehicles.
- CVT enforcement on real estate transactions has been tightened.
- Provinces are exploring enhanced valuation mechanisms to prevent undervaluation in property transfers.
🏁 Conclusion
Capital Value Tax (CVT) in Pakistan plays a crucial role in documenting wealth and broadening the tax base. Whether you’re acquiring property, registering a vehicle, or holding foreign assets, understanding your CVT obligations is essential for compliance and risk mitigation.
At S&B Advisors and Consultants (Private) Limited, we offer expert advisory on:
- CVT calculations and payments
- Foreign asset declarations
- Real estate and vehicle transaction tax planning
- End-to-end support for property registrations and reconciliations with FBR/SRB
📞 Contact us today to stay compliant and optimize your tax profile.
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