The boat was carrying a wedding party when it met with the accident near Sher Shah Bridge area in the central Pakistani city.
"So far 12 dead bodies have been retrieved," Ghulam Nabbi, a local district official told PTI over telephone.
"The rescue workers are still searching for other bodies," he said.
Nabbi was unsure about the exact number of people onboard, but Radio Pakistan reported that the ill-fated boat was carrying 25 people.
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Artificial breaches were created at selected points to save Muzaffargarh but the diverted water inundated several small villages.
Radio Pakistan said that a spur has been breached by flood waters near Thatha Sialan in Muzaffargarh district and the flood water made its way to Taliri Canal, spreading in the surrounding areas of Moradabad and Thatha Sialan.
The district commissioner Muzaffargarh declared emergency in Taliri areas of the city and asked residents to move to safer places.
Army today said in a statement that rescue and relief operations are ongoing in Multan, Muzaffargarh, Uchsharif, Bahawalpur and Athara Hazari.
It also said more than 37,000 people have been rescued.
Meanwhile a junior commissioned officer of army was killed during rescue operation in Multan.
The total death toll due to floods and rains have touched 280, according to National Disaster Management Authority. Over two million people have also been affected.