The Federal Board of Revenue (FBR) has introduced a new requirement for overseas Pakistanis, mandating them to obtain approval from the concerned Commissioner Inland Revenue (FBR) to verify their non-resident status for tax rate benefits on property transactions.
This new condition is part of the FBR’s clarification regarding the creation of withholding tax challans under sections 236C and 236K of the Income Tax Ordinance.
Real estate expert Muhammad Ahsan Malik informed Business Recorder that this provision was already in place until June 30, 2024. However, the FBR has now replaced the non-resident category with a new category for late filers on the FBR portal, an issue experts have raised without resolution.
Under the Finance Act of 2022, some non-resident Pakistanis were exempt from filing income tax returns. As a result, they were not listed as active taxpayers and might face issues under certain provisions of the tax laws. To address this, non-residents holding Pakistan Origin Cards (POC) or National ID Cards for Overseas Pakistanis (NICOP) are exempt from certain tax rules on property transactions subject to withholding taxes.
However, Malik criticized the FBR’s latest clarification, saying that instead of easing the process for overseas Pakistanis, it has added an extra layer of bureaucracy by requiring them to obtain a certificate from the concerned Commissioner Inland Revenue to verify their non-resident status.
Furthermore, there is still no clarity on whether overseas Pakistanis will face Federal Excise Duty (FED) charges on property transactions, and whether they would be treated as non-filers when making such payments.
Malik questioned why the previous system, which was simpler, was changed. The new requirement would only add unnecessary delays to the exemption process that was already available.
The real estate expert also dismissed claims on social media that new exemptions had been granted to overseas Pakistanis.
The FBR’s recent clarification outlines that non-resident individuals holding POC or NICOP cards are exempt from certain provisions when involved in property transactions subject to withholding tax. The FBR’s updated IRIS system will now ask non-resident taxpayers to upload their POC/NICOP cards. Afterward, the concerned Commissioner Inland Revenue will verify their status, and once confirmed, the exemption will be granted. The FBR has requested that these verifications be processed promptly within one business day.
