FBR to auction Bahria Town’s 527 kanals in Murree on 5th March. But what exactly has led to this action?

Islamabad: The Federal Board of Revenue (FBR) has decided to auction 527 kanals of land owned by Bahria Town in Tehsil Murree on the 5th of March 2026. The auction is meant to help recover Rs 26 billion in unpaid taxes that Bahria Town owes to the federal government for the tax years 2020 and 2022.

This is the second date that the FBR has given for the auction. Originally, the auction was supposed to take place on the 16th of February, but on the day of the scheduled auction, without disclosing any reason, FBR rescheduled it to the 5th of March. The auction will be held at the Large Taxpayers Office in Islamabad.

While no official word has come from the FBR, Profit understands that the reserve price for the property is possibly over Rs 1.5 billion and could be as high as Rs 2 billion.

Legal Background: A Shift in Accounting

The upcoming auction is the culmination of a decade-long dispute over tax accounting. For years, Bahria Town utilized the "Percentage of Completion" (POC) method, which allowed them to defer tax payments by treating customer payments as "advances", and not as taxable revenue, until construction milestones were met.

However, a landmark Supreme Court judgment on March 18, 2025 (M/s Emaar DHA Islamabad v. CIR), conclusively settled that land developers selling plots are ineligible for the POC method. The Court ruled that because developers do not physically build houses for plot customers, they must use the accrual method, requiring them to recognize income immediately upon a sale. Consequently, what Bahria Town once recorded as deferred advances were reclassified as taxable income, creating the current Rs 26 billion default.

Crucially, this tax recovery action is entirely separate from, and unrelated to, the historic Rs 460 billion settlement case concerning Bahria Town's land acquisition in Malir, Karachi.

Aggressive Recovery Measures

Under powers given to the FBR in the last budget, the revenue authority can now seize and auction property from defaulters. The FBR recently auctioned Bahria Town’s corporate office on Park Road in Islamabad for over Rs 2 billion.

The announcement of the Murree land’s auction—527 kanals at Mauza Kathar Sharqi, Angori Road—is directly linked to these tax evasion findings. While the neighboring Golf City project remains disputed by original landowners over environmental concerns, the FBR successfully attached this specific 527-kanal parcel on September 22, 2025.

The crackdown has intensified elsewhere as well, with the FBR taking physical control of the Bahria Town Tower in Karachi, which houses 145 residential units and 42 offices, to further secure the Rs 26 billion recovery. Sources said that FBR team had also confiscated important documents from Bahria Town Tower during a raid on October 7, 2025 as reportedly the management of Bahria Town was looking after all their country wide projects from Bahria Town Tower Karachi.

What comes next? 

Sources revealed that the FBR may ask potential bidders in the upcoming auctions to demonstrate that they possess sufficient assets to purchase the 526 kanal property. Following the auction of the Park Road plot to owner of a digital television channel Azad TV, sources said discussions were initiated regarding net assets of successful bidders.

Sources told Profit that FBR may also start investigating another property of Bahria Town, the Mall of Islamabad.

The general public has already invested over Rs 30 billion in Mall of Islamabad for purchasing apartments and commercial shops and there is discussion within the FBR of options where the government can secure the billions of rupee of public investment made in Mall of Islamabad, while also recovering tax default amount for the government.