ISLAMABAD: The Federal Board of Revenue (FBR) on Friday issued detailed guidelines for taxpayers to pay tax on immovable properties under section 7E of the Income Tax Ordinance, 2001.
The guidelines have been placed on the FBR website for the facilitation of the general public.
The FBR has issued guidelines for both registered and unregistered users.
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The FBR has guided the taxpayers on how a taxpayer can pay the tax on immovable property.
Under the owner portion of the IRIS page, the user must enter the particulars of Registering/Transferring Authority of Immovable Property i.e. province, District; Complete Address; Town/Tehsil; City/ District and total area.
A question will be asked whether the property is constructed or not. User will have two options i.e., yes/no.
In case the user selects the yes radio button, then the system will ask the user to enter the covered area. In case of “no”, the user will move on to the next area. The next area will be the value of property and tax computation. The user will declare the cost of the property and fair market value, and the system will calculate the tax on the said property.
The FBR has already implemented the judgment of the Lahore High Court (LHC) on Section 7E (tax on deemed income basis) of the Income Tax Ordinance 2001 and now Section 7E will not apply to cases (filers/non-filers) falling within the jurisdiction of the LHC.
The FBR had abolished the condition of obtaining exemption certificates from the Commissioner Inland Revenue from different categories of taxpayers including non-resident persons under Section 7E of the Income Tax Ordinance, 2001.
The FBR has relaxed many procedural conditions of section 7E through the issuance of circular number 3 of 2023.
The FBR has also announced that non-resident individuals including non-resident Pakistanis are not required to pay tax on immovable properties under Section 7E of the Income Tax Ordinance, 2001.
The FBR has also relaxed the condition of obtaining exemption certificates from the Inland Revenue Commissioners in different cases as specified in the said circular.
The FBR said that the explanatory circular, which is being issued for facilitating the sale of property or transfer transactions, will be valid for an interim period till the development of an automated system for this purpose.
The FBR has further clarified that the conditions regarding obtaining a certificate from the commissioner outlined in Circular No 1 of 2023-24 will not apply with respect to the situations enumerated. However, transferring authority of immovable property will maintain a proper record of the seller/transferor data along with relevant documents with respect to properties under sale/transfer covered under these specified situations.
Section 7E of the Ordinance does not apply to immoveable property owned by a local authority, a development authority and builders and developers for land development and construction, subject to the condition that such persons are registered with the Directorate General of Designated Non-Financial Business and Professions (DNFBP).
The provisions of section 7E are not applicable on a property in the first year of acquisition on which tax under section 236K has duly been paid by the purchaser. In such a case the seller/transferor of a property will furnish to the transferring authority a computerised payment receipt (CPR) having a unique CPR number, bearing the seller or transferor’s name, CNIC number and showing the tax paid under section 236K, date of payment as well as tax year.
The provisions of Section 7E of the Income Tax Ordinance, 2001 are not attracted to an immoveable property allotted to Shaheed or dependents of a Shaheed belonging to Pakistan Armed Forces; a person who dies while in the service of the Pakistan Armed Forces or the federal and provincial government; a war-wounded person while in the service of the Pakistan armed forces or federal or provincial government; an-ex-serviceman and serving personnel of armed forces or ex-employees or serving personnel of federal and provincial government.
Therefore, where a seller or transferor belongs to aforesaid categories of persons, the condition of mode and manner of furnishing of evidence to the transferring authority notified through Circular No 1 of 2023 will not apply to such categories of persons.
Copyright Business Recorder, 2023