The overseas Pakistanis will now be required to obtain consent from the Commissioner of Inland Revenue (FBR) before verifying their non-resident taxation status to avail of the tax rates applicable to the ‘filers’ on transactions associated with immovable property. The Federal Board of Revenue (FBR) has issued a clarification regarding the creation of withholding tax challans under Sections 236C and 236K of the Income Tax Ordinance. Admonishing such reports being floated on social media, estate experts said they were misleading and untrue, with no such exemption granted to overseas Pakistanis.
Existing Provisions and New Requirements
Under the Finance Act 2022, certain non-resident Pakistanis may be exempted from filing income tax returns as per the Ordinance’s applicable provisions; thus, they do not figure on the Active Taxpayers List (ATL) and so fall under Rule 1, Tenth Schedule, of the Ordinance. The FBR now clarifies that non-resident Pakistanis possessing a Pakistan Origin Card (POC) or National ID Card for Overseas Pakistanis (NICOP) now have immunity from section 100BA and Rule 1 of the Tenth Schedule for transactions with tax collectible under sections 236C and 236K of the Ordinance, which include purchase or sale of immovable property.
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Process of Verification
Claiming exemption from the taxes for being non-resident taxpayers, these individuals will upload their NICOP or POC onto the FBR’s IRIS system. A provisional PSID will then be generated and submitted to the specific Chief Commissioner of Inland Revenue (CCIR), who will afterward assign it to the Commissioner in charge of that taxpayer for verification. Officers will inform taxpayers of their exemption status by SMS or e-mail after the verification process.
FBR Instructions
The FBR directed the Chief Commissioners of Inland Revenue to ensure that such verifications get processed within one business day to avoid unnecessary delays.