The Federal Board of Revenue (FBR) imposed a new requirement for overseas Pakistanis to obtain approval from the Commissioner Inland Revenue to verify their non-resident status.
The condition applies to availing the tax rates of “filers” for immovable property transactions under sections 236C and 236K of the Income Tax Ordinance.
According to the FBR, this measure is aimed at streamlining the process of withholding tax challans for such transactions.
However, real estate expert Muhammad Ahsan Malik criticized the move, stating that the provision existed until June 30, 2024, but the FBR unexpectedly replaced the “non-resident” category on its portal with “late filers.” Despite repeated appeals from stakeholders, the issue remains unresolved.
Under the Finance Act, 2022, certain non-resident Pakistanis are exempt from filing income tax returns.
However, their exclusion from the Active Taxpayers List (ATL) subjects them to higher tax rates under the Tenth Schedule. To address this, the FBR clarified that overseas Pakistanis holding Pakistan Origin Cards (POC) or National Identity Cards for Overseas Pakistanis (NICOP) are exempt from sections 100BA and the Tenth Schedule for property transactions under sections 236C and 236K.
In an interview with Business Recorder, Malik said that the new requirement for a certificate verifying non-resident status complicates an already available exemption.
The approval process involves uploading POC or NICOP details in the IRIS system, after which the Commissioner Inland Revenue verifies the non-resident status. Once approved, the taxpayer is notified via SMS or email.
The FBR instructed Chief Commissioners Inland Revenue to process verifications within one business day.
Additionally, Malik highlighted the absence of clarity on Federal Excise Duty (FED) for overseas Pakistanis in property transactions. He questioned the necessity of altering the previous system, which was simpler and more efficient. Contrary to reports, no new exemptions have been introduced for overseas Pakistanis, he emphasized.
The development raised concerns about the increased bureaucratic hurdles faced by overseas Pakistanis in availing tax-related benefits.