ISLAMABAD: The Federal Board of Revenue (FBR) has imposed a new condition on the overseas Pakistanis to obtain approval from concerned Commissioner Inland Revenue (FBR) to verify status of non-resident for payment of tax rates of “filers” on immovable property transactions.

In this regard, the FBR has issued a legal clarification on creation of withholding tax challan under section 236C and section 236K of the Income Tax Ordinance. When contacted Muhammad Ahsan Malik, a real estate expert told Business Recorder that the provision was already available in the FBR’s laws till June 30, 2024.

Suddenly, the FBR replaced non-resident category from FBR Portal and replaced it with new category of late filers. Experts have repeatedly raised the issue with the government at different levels but in vain.

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Under Finance Act, 2022, some of non-resident Pakistanis may not be required to file income tax return by virtue of applicable provisions of the Ordinance. Therefore, they do not appear on the active taxpayers list and hence likely to suffer the mischief of rule 1 of Tenth Schedule of the Ordinance.

In order to facilitate non-resident Pakistanis holding Pakistan Origin Card (POC) or National ID Card for Overseas Pakistanis (NICOP), provisions of section 100BA and rule 1 of the Tenth Schedule will not apply on them in respect of transactions on which tax is collectible under section 236C and 236K of the Ordinance that apply on purchase or sale of immoveable property.

He stated that the FBR has not facilitated overseas Pakistanis through the said clarification issued by the Board. Instead of giving any relaxation to the overseas Pakistanis, another condition has been slapped to obtain certificate from the concerned Commissioner Inland Revenue. The said Commissioner would verify the non-resident status of the overseas Pakistanis.

Moreover, the FBR has not clarified the issue of payment of Federal Excise Duty (FED) on immovable property transactions by overseas Pakistanis. Whether the overseas Pakistanis/ non-residents would be treated as non-filer at the time of payment of FED on immovable property transactions, Ahsan Malik added.

Ahsan Malik raised question, what was the problem with the previous system which needed to be changed. The condition of seeking approval of the concerned Commissioner Inland Revenue would only lengthy the process of exemption already available to the overseas Pakistanis.

Real estate expert categorically denied reports on social media that some kind of new exemption has been granted to the overseas Pakistanis.

The existing section (111AC) of the Income Tax Ordinance reads as: The provisions of section 100BA and rule 1 of the Tenth Schedule shall not apply to non-resident individual holding Pakistan Origin Card (POC) or National ID Card for Overseas Pakistanis (NICOP) in respect of transactions on which tax is collectible under section 236C and 236K of the Ordinance.

The section 100BA is related to the special provisions relating to persons not appearing in active taxpayers’ list.) The collection or deduction of advance income tax, computation of income and tax payable thereon [in respect of a person not appearing on the active taxpayers’ list] shall be determined in accordance with the rules in the Tenth Schedule.

According to the FBR’s clarification, in this context, a change is being incorporated in the IRIS System for any non-resident taxpayer who wishes to avail the exemption under clause 111AC while creating the CPR, he will be asked to upload his Pakistan Origin Card/ NICOP Card, and after doing so a provisional PSID will be generated, which will be forwarded to the login of the concerned CCIR.

Then, CCIR will be granted access to mark the case to the concerned CIR, who would be required to verify the veracity of the status of non-resident. Once CIR is satisfied, he may allow the taxpayer to avail the exemption, and the non- resident/taxpayer will be intimated through SMS/ e-mail about the approval after which he can avail the exemption.

The Chief Commissioners Inland Revenue are requested to process the verification on priority basis within one business day, FBR added.

Copyright Business Recorder, 2024