FBR Imposes New Condition on Overseas Pakistanis for Property Transactions
ISLAMABAD: The Federal Board of Revenue (FBR) has imposed a new condition on overseas Pakistanis. Now, they have to take. permission from the relevant Commissioner Inland. Revenue to affirm their non-resident status for availing the “filer” tax rates on immovable property transactions.
The FBR recently issued a legal clarification about how to create a withholding tax challan under sections 236C and 236K of the Income Tax Ordinance. According to real estate expert Muhammad Ahsan Malik, this provision has been part of FBR’s rules until June 30, 2024.
however, the non-resident category has now been replaced on the FBR’s portal by a new one that is meant for the late. filers. But still. no action has been initiated about this issue.
Change in the FBR System in case, of Non-Residents
Under the Finance Act of 2022, according to Income. Tax Ordinance, no income tax return is compulsorily required to file. by some non-resident Pakistanis. Hence, the same is not present in active. taxpayers’ list and stands liable to face penalty under particular rules of the Ordinance.
Help to Pakistan Origin Card holders or National Identity Card for Overseas Pakistanis by stating that the FBR will not charge under sections 100BA and 236C/236K as these sections are with reference. to taxes on immovable property transactions, including selling or buying.
New Procedure to Allow Exemption from Taxation
While the clarification by FBR was meant to help overseas Pakistanis, it has instead added one more step. Now non-resident Pakistanis would require a certificate from concerned Commissioner Inland. Revenue which, would add one more step that may prolong and complicate the exemption process.
Experts, including Malik, have criticized this change, questioning why the previous system, which was simpler, was altered. The FBR has also not provided any clarity about the payment of Federal Excise Duty (FED) on property transactions by overseas Pakistanis.
No New Exemption for Overseas Pakistanis
Contrary to the widespread reports posted on social media, Malik clarifies that the government had not issued new exemptions on overseas Pakistanis. However, the law remains; the section. 111AC in the Income Tax Ordinance explains that a person who owns a POC or NICOP is exempted from particular taxes to be paid on the immovables’ transactions.
The FBR has implemented some technical changes in its system. In this regard, the process of creating a tax challan will now require a non-resident taxpayer to upload his POC or NICOP. After uploading, it will generate a provisional PSID, which will be transmitted to the relevant Chief Commissioner Inland, Revenue (CCIR) for verification. Upon satisfaction of the CCIR, they will allow exemption, and the taxpayer will receive an approval, through SMS or email.
The FBR has asked the verification process to be done within one working day.
Conclusion
The new requirement from the FBR for non-resident Pakistanis may cause a delay in acquiring tax exemptions on property transactions. Though the idea is that of proper collection of taxes, the added steps may be a bit cumbersome for non-resident Pakistanis.
