Inheritance tax and inheritance law in Pakistan
Taxation Researcher | November 10, 2020
The Global Property Guide looks at inheritance from two angles: taxation, and what inheritance laws apply to foreigners leaving property in Pakistan: what restrictions there are and whether making a will is advisable.
There are no inheritance taxes in Pakistan.
Thanks to Khursheed Khan & Associates
What inheritance laws apply in Pakistan?
Inheritance provisions in Pakistan depends on religious affinities.
All persons of sound mind, regardless of their nationality or residential status, are entitled by law to inherit immovable and/or movable property in Pakistan, but the inheritance provisions depend on whether the deceased was a Christian, a Hindu, or a Muslim. Within the Muslim category, the definitions of heirs, and their shares, are decided according to their sects and sub-sects, e.g. Cutchi Memon, Khoja, Sunni or Shia.
The judiciary depends on the domicile of the deceased.
The competent judges to handle property and inheritance issues are those in the last domicile of the deceased. If this is contested, or unknown, then the judiciary depends on where the property is located. For property located in Pakistan, a Civil District Court, or a High Court, is competent to handle inheritance issues.
National laws may apply to non-Muslims domiciled outside Pakistan.
If a deceased foreigner is not a Muslim, and his/her national law states that the applicable inheritance law is that of the country where the deceased is domiciled, or the country where the deceased´s property is located, then the laws of that country will be be applied in Pakistan. Consequently, if a Hindu or Christian with assets in Pakistan died whilst domiciled outside Pakistan, then in most circumstances the courts in Pakistan would distribute the assets according to the provisions of the foreigner´s national inheritance law.
Muslims domiciled in or outside Pakistan must follow Muslim Law.
The courts in Pakistan, in matters of succession to the estate of a Muslim, can only apply Muslim inheritance law, irrespective of the domicile or nationality of the deceased. If a Muslim citizen of Pakistan dies whilst domiciled in foreign country, then the laws of his domicile can not be applied to his estate in Pakistan.
Muslim Law of inheritance in Pakistan is based on the following:
- There is no concept of a will, and all shares are distributed to legal heirs by intestate succession.
- The shares of the inheritance depend on the closeness of the relationship of the legal heirs to the deceased. Blood relations have the closest ties. It is not possible here to provide a simple summary of how these shares are distributed. It depends on how many children, sisters, brothers, mothers, and other relatives the deceased person had, and it changes from case to case. A Muslim lawyer in Pakistan should be consulted for more specific details.
- In most cases, a man´s share of the inheritance is twice that of woman´s. Any gift given by the woman´s fiancÃ© is her own, and her husband has no legal right to claim it, even after marriage. On marriage, she is entitled to receive a marriage gift called Mohr, and this is her own property.
- Muslim heirs acquire an absolute interest in specific shares of the estate of their ancestor, even before distribution. The time of distribution is not material. Succession opens at the position prevailing at the moment of death of the ancestor. ´Vested inheritance´ may occur i.e. if an heir dies before distribution, but was alive at the ancestor´s death, the share of his/her vested inheritance passes on to his/her heirs.
Property can be donated during the lifetime of a Muslim.
A Pakistani Muslim can freely give away any personal property before death. No one, including the legitimate heirs, can challenge this decision after the death of the donor.
Transfers of property in Pakistan must be registered.
The Registrar of Properties in the area of Pakistan where the property is situated records all transfers, following name changing procedures at various departments, including the Building Control Authorities, Local Government (City Government), Excise and Taxation (Property Taxes) and Utility Companies. Courts look at the names on these records to determine the legal ownership of inherited property in Pakistan.