FBR announces relief from taxation on the transfer of immovable property to overseas Pakistanis

FBR announces relief from taxation transfer of immovable property. The Federal Board of Revenue (FBR) announces relief from taxation on the transfer of immovable property to overseas Pakistanis as per Section 7E of the Income Tax Ordinance 2001, according to news published in the leading newspaper on August 15.

FBR Issues Circular No. 3

As per the details, the FBR issued Circular No. 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.

Explanatory Circular

The FBR has explained that this explanatory Circular aims to facilitate property sales and transfer transactions. It will remain effective until an automated system establishes for this purpose. It has been further clarified that the conditions as outlined in Circular No. 1 of 2023-24, will not be applicable in certain situations.

Read: FBR Provides An Exemption From Taxation For The Transfer Of Agricultural Properties

DNFBP

According to the circular, section 7E of the Ordinance will not be applicable to immovable property. Moreover, it owns by local authorities, and development authorities for land 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).

Data  Records

However, the authority responsible for transferring immovable property will maintain accurate records of the seller/transferor information. Additionally, this recorded data will regularly shared by the transferring authority with the respective Chief Commissioner IR of the Regional Tax Office.

Section 7E Provisions

Moreover, the provisions of section 7E do not apply to property during its first year of acquisition. If tax under section 236K has 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. It contains details such as the seller or transferor’s name, CNIC number, tax paid under section 236K, payment date, and tax year.

Read: I-15 Plot Allottees Are Given A Deadline For Clearing Development Charges

Conclusion

The FBR announces relief from taxation on the transfer of real estate to Pakistanis living abroad. It is a crucial turning point for the economy of the country and the real estate market. Due to numerous representations received, the FBR has introduced this circular to address challenges related to the implementation of sub-section (2A). However, Section 236C of the Ordinance concerning the application of Section 7E for property sales or transfers.

FBR announces relief from taxation transfer of immovable property. 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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