Non-resident applicants: IRIS to automatically process, issue exemption certificates

ISLAMABAD: The Federal Board of Revenue’s electronic system (IRIS) will automatically process and issue exemption certificates to non-resident applicants to effectively deal with the problem of delays by the commissioners Inland Revenue.

Explaining an important provision of the Finance Act 2023, Habib Fakhruddin, FCA Senior Partner Amir Alam Khan & Co, Chartered Accountants told Business Recorder that the payments to a non-resident attract deduction of tax at source under various provisions of the Income Tax Ordinance.

However, in certain situations, the income of the non-resident is not chargeable to tax under the Ordinance, the person intending to make the payment without deduction of tax at source is required to inform the Commissioner and obtain an exemption certificate to this effect.

Delay in issuance of exemption certificates was a constant problem, for which it was provided that the commissioner will dispose of the exemption certificate application within 30 days. However, no consequence of non-issuance of exemption certificate within this time limit was provided in the law, he maintained.

A positive step has been taken and now, if the exemption certificate is not issued within30 days, it will be deemed that the exemption certificate is issued and the FBR’s electronic system “IRIS” will automatically process and issue the certificate.

On the other hand, the Commissioner has been empowered to modify or cancel the certificate issued automatically by the “IRIS” on the basis of reasons to be recorded in writing after providing an opportunity of being heard to the applicant.

The subsequent modification or cancellation of the exemption certificate by the

commissioner will raise issues in respect of payments made during the currency of automatically issued exemption certificate, which have not been addressed, Habib Fakhruddin added.

Copyright Business Recorder, 2023