Islamabad: The Federal Board of Revenue (FBR) has adopted the Lahore High Court’s (LHC)’s judgement regarding Section 7E of the Income Tax Ordinance 2001, according to news published on August 16. Now, Section 7E won’t be applicable to cases (both filers and non-filers) within the LHC’s jurisdiction.
In a recent income tax circular, the FBR eliminated the requirement for exemption certificates from the Commissioner Inland Revenue. This change applies to various taxpayer categories, including non-resident individuals, as stipulated in Section 7E (tax on deemed income basis).
According to sources, real estate expert Muhammad Ahsan Malik explained that Section 7E won’t apply to property transfers within Punjab, regardless of the filer or non-filer status. Thus, cases in Punjab won’t require Commissioner of Inland Revenue exemptions.
Through Circular No 3 of 2023, the FBR eased procedural conditions outlined in Section 7E. The circular clarifies its applicability in cases under the jurisdiction of the LHC unless its decision with reference to the judgment in WP no 52559 of 2022, is reversed.
Non-resident individuals, including non-resident Pakistanis, are now exempt from paying tax on immovable properties under Section 7E. The circular streamlines the exemption certificate process specified by the Inland Revenue Commissioners. This explanatory circular simplifies property sale or transfer transactions temporarily until an automated system is developed. The conditions in Circular No. 1 of 2023-24 won’t apply in certain cases, but the transferring authority will maintain seller/transferor records shared with relevant tax offices.
The FBR received inquiries about furnishing evidence for Section 7E’s application. To facilitate newly-introduced sub-section (2A) implementation, Circular No. 1 of 2023-24 has been modified and extended.
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