| Islamabad: The Federal Board of Revenue (FBR) has announced that tax exemption for non-resident Pakistanis on sales or transfer of immovable properties as per Section 7E of the Income Tax Ordinance 2001, according to news published in the leading newspaper on August 15.
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As per the details, the FBR issued Circular number 3 of 2023, under which it was mentioned that the many procedural conditions of Sector 7E have been eased. The board has relaxed the obligation of obtaining exemption certificates from the Inland Revenue Commissioners in various cases.
The FBR has explained that this explanatory Circular aims to facilitate property sales and transfer transactions and will remain effective until an automated system is established for this purpose. It has been further clarified that the conditions mandating a certificate from the Commissioner, as outlined in Circular No. 1 of 2023-24, will not be applicable in certain situations.
According to the circular, section 7E of the Ordinance will not be applicable to immovable property owned by local authorities, development authorities, builders, and developers for land development and construction. This exemption is subject to the condition that such entities are registered with the Directorate General of Designated Non-Financial Business and Professions (DNFBP).
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However, the authority responsible for transferring immovable property will maintain accurate records of the seller/transferor information, including relevant documentation for properties being sold or transferred under the specified situations. This recorded data will be regularly shared by the transferring authority with the respective Chief Commissioner IR of the Regional Tax Office, having jurisdiction over the seller/transferor, on a weekly basis starting from the date of the circular’s issuance.
Moreover, the provisions of section 7E do not apply to property during its first year of acquisition if tax under section 236K has been duly paid by the purchaser. In such cases, the seller/transferor of the property will need to provide a Computerized Payment Receipt (CPR) with a unique CPR number, containing details such as the seller or transferor’s name, CNIC number, tax paid under section 236K, payment date, and tax year.
The provisions of section 7E of the Income Tax Ordinance, 2001, do not pertain to immovable property allotted to Shaheeds (individuals who died in service of the Pakistan Armed Forces), their dependents, war-wounded personnel, ex-servicemen, or serving personnel of the armed forces and government. Hence, for sellers or transferors falling within these categories, the conditions for furnishing evidence to the transferring authority, as notified in Circular No. I of 2023, will not apply.
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Due to numerous representations received, the FBR has introduced this circular to address challenges related to the implementation of sub-section (2A) of section 236C of the Ordinance concerning the application of Section 7E for property sales or transfers.
Furthermore, the FBR has also clarified that the contents of the said circular will not be applicable to cases falling under the jurisdiction of the Lahore High Court. |
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