Tax on Gift in Pakistan is an important but often overlooked aspect of our financial and cultural practices. Giving gifts to our loved ones on occasions such as marriages, birthdays, or other special events is deeply rooted in our traditions. These gestures help strengthen family bonds—for example, exchanging gifts between spouses or close relatives. However, many people remain unaware of the tax implications associated with the giving and receiving of gifts in Pakistan
Types of Gift
Gifts are broadly classified into two main categories:
- Gift in Kind:
These are non-monetary gifts and may include immovable property (such as a house, flat, or plot), gold, jewellery, or other valuable items.
- Gift in Cash:
These are monetary gifts, typically given in the form of cash, cheques, or electronic transfers.
Tax on Gift in Pakistan : Under the appliable laws, gifts are only exempt from taxes if received from relatives as defined under the law. If received from non-relatives, gifts are treated as taxable income under Section 39(1)(a) and are included in “Income from Other Sources.”
Definition of Relatives (as per laws):
- Parents, grandparents, and great-grandparents
- Children, grandchildren, and great-grandchildren
- Siblings, cousins, nieces, and nephews
- Adopted children
- Spouse
Example:
If a salaried individual earning PKR 600,000 annually receives a gift of PKR 1,000,000 from a friend (non-relative), their total taxable income becomes PKR 1,600,000, As a result, they will be liable to pay income taxes of Rs. 50,000.
For a gift to be exempt from taxes , the following conditions must be met:
- Monetary gifts must be transferred through a bank channel (cross cheque, online transfer, etc.)
- The donor must be a relative as defined above.
- A valid gift deed should be executed (sample Declaration of Gift is attached). Gift-_Amount-through-Cross-Cheque Gift_On-behalf-Payment-for-Property
- Both the donor and the donee must declare the gift in their income returns for year in which they have received
- There is no requirement for the lender to be a relative in the case of a loan; however, cash transactions are not permitted. Both the lender and the borrower must possess valid NTNs and have filed their returns, wherein the loan amount should be duly declared by both parties.
- Exceptions for cash gifts/loans : However, an exception to this rule exists in cases where gifts or loans are exchanged between close blood relatives, such as real brothers, sisters, or parents. In such cases, cash transactions have been permitted, as upheld by various court decisions
Supporting Court Decisions:
- 2006 PTD 529
- 2025 PTD 380
- Supreme Court Civil Appeal No.1127 of 2011
Tax on Gift In Pakistan : Immovable Property
Under Section 236-K of the Ordinance, withholding taxes on the transfer of immovable property does not apply in case of gifts. The FBR has clarified that genuine gifts between immediate family members (spouse, parents, children, siblings) are exempt from withholding taxes under this section.
Capital Gains Tax:
No capital gains arises on the transfer of any asset by way of gift to relatives.
Tax on Gift in Pakistan :Examples
Example 1:
Mr. Zubair is a salaried employee. He took a cash loan of PKR 100,000 from a friend and recorded it in his books as cash in hand and a credit to the loan account.
The entire amount is taxable because it was received in cash and not via banking channel.
Example 2:
Mr. Awais, a government servant, received PKR 500,000 via cross cheque from his uncle (who holds an NTN).
The gift is exempt, as the donor is a relative, the transfer was via bank, and the donor has an NTN.
Example 3:
Mr. Ali, a salaried person, gifted PKR 400,000 to his wife through IBFT. However, Mr. Ali does not have an NTN and has never filed a tax return. Tax Treatment: The gift will be taxable in the hands of his wife, despite being his spouse, because the donor is not a registered taxpayer.
It is essential to document all gift transactions properly, ensure transfers are done via banking channels, and that both donor and donee are active filers with valid NTNs. Failure to meet these conditions can lead to unnecessary tax liabilities—even within close family. For further assistance in drafting gift deeds, filing tax returns, or handling FBR notices related .
Please contact us through our website by filling out the Contact Us form, or reach out via our social media accounts
