The FBR Tax Conditions for Overseas Pakistanis in relation to property transactions have been updated for 2024. These changes introduce a new requirement for overseas Pakistanis involved in buying and selling immovable property.
They will now need to obtain approval from the Commissioner Inland Revenue (FBR) to verify their non-resident status in order to qualify for tax rates applicable to “filers.”
Key Updates in FBR Tax Conditions for Overseas Pakistanis (2024)
In 2024, the Federal Board of Revenue (FBR) released an important clarification regarding the creation of withholding tax challans under sections 236C and 236K of the Income Tax Ordinance. The update specifically targets the tax procedures for overseas Pakistanis involved in property transactions.
Key Highlights:
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Clarification Issued: The FBR clarified the procedures for creating withholding tax challans under sections 236C and 236K of the Income Tax Ordinance.
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No New Exemptions: Contrary to some rumors circulating on social media, real estate experts have confirmed that no new exemptions or tax concessions have been granted to overseas Pakistanis.
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Reaffirming Existing Rules: The recent FBR update simply reiterates the existing tax rules and does not introduce any new provisions or changes for overseas Pakistanis.
These updates aim to ensure clarity in tax procedures and correct any misconceptions circulating online.
How the New Requirements Affect Overseas Pakistanis
Under the revised FBR Tax Conditions for Overseas Pakistanis, non-resident Pakistanis holding a Pakistan Origin Card (POC) or National ID Card for Overseas Pakistanis (NICOP) are still eligible for exemptions under sections 236C and 236K, which apply to the purchase or sale of immovable property. However, the FBR now mandates that these individuals must obtain a certificate from the Commissioner Inland Revenue to confirm their non-resident status.
This additional step will likely result in a longer process for overseas Pakistanis to avail themselves of the tax exemptions that they are eligible for. It requires submitting extra documentation and undergoing verification, potentially delaying property transactions.
FBR’s New Verification Process for Exemptions
The Finance Act of 2022 had already set provisions for certain overseas Pakistanis not required to file income tax returns. These individuals typically do not appear on the Active Taxpayers List (ATL).
However, the FBR’s recent clarification has changed the verification process. Non-resident Pakistanis wishing to claim exemptions under sections 236C and 236K must now upload their POC or NICOP to the IRIS system.
Once the documents are uploaded, a provisional PSID is generated and sent to the concerned Chief Commissioner Inland Revenue (CCIR). The CCIR assigns the case to the Commissioner Inland Revenue (CIR), who is responsible for verifying the non-resident status. If the CIR is satisfied, the exemption is approved, and the taxpayer is notified via SMS or email.
Impact of the New FBR Tax Conditions on Property Transactions
The FBR Tax Conditions for Overseas Pakistanis have introduced new procedural steps that may impact overseas Pakistanis looking to buy or sell property. While no new exemptions are being granted, the verification process required by the FBR will add extra time to the transaction process. Overseas Pakistanis will need to navigate this new requirement to avoid delays and ensure that they can benefit from the tax exemptions available to them.
Navigating the FBR Tax Changes for Overseas Pakistanis
The recent updates to the FBR’s tax conditions bring clarity to the process for overseas Pakistanis involved in property transactions. Although the changes do not offer additional exemptions, they do introduce a verification requirement that could slow down property transactions. Overseas Pakistanis are encouraged to stay informed and comply with the new procedures to ensure smooth property dealings.
Also Read: FBR to Increase Property Valuation by Up to 75% in Major Cities
