Tax Exemptions for Overseas Pakistanis by Federal Board of Revenue (FBR)
Published on by Rashid Minhas
Average Read time: 3 minutes 44 seconds
The Federal Board of Revenue (FBR) has announced an tax exemptions for overseas Pakistanis engaged in property transactions. This initiative is part of the FBR’s commitment to facilitating expatriates and streamlining processes to encourage investment in Pakistan’s real estate sector.
Who Qualifies for the Exemption?
Overseas Pakistanis holding:
- Pakistan Origin Card (POC).
- National Identity Card for Overseas Pakistanis (NICOP).
- Exemption applies even if they are not listed on the Active Taxpayers List (ATL).
Legislative Framework
- Introduced under Clause 111AC of the Finance Act, 2022, amending the Income Tax Ordinance, 2001.
- This clause specifically exempts non-resident individuals from higher tax rates applicable under:
- Section 236C: Tax on the sale of immovable property.
- Section 236K: Tax on the purchase of immovable property.
Process for Claiming Tax Exemptions
- Updating Taxpayer Information in IRIS
- Non-resident individuals must upload their POC or NICOP details in the IRIS system when creating a withholding tax challan under Sections 236C and 236K.
- Provisional Payment Slip ID (PSID) Generation
- Once the information is uploaded, a PSID is generated and forwarded to the Chief Commissioner Inland Revenue (CCIR).
- Verification Process
- The CCIR assigns the case to the relevant Commissioner Inland Revenue (CIR).
- The CIR verifies the taxpayer’s non-resident status to confirm their eligibility.
- Notification of Exemption
- Upon approval, the taxpayer receives confirmation via SMS and email, allowing them to proceed with property transactions without incurring higher tax rates.
- Processing Timeline
- To enhance efficiency, the FBR has instructed that the verification and approval process be completed within one business day.
Why is this Initiative Significant?
- Encouraging Investment
- By reducing tax burdens and streamlining processes, the FBR is incentivizing overseas Pakistanis to invest in Pakistan’s property market.
- Acknowledging Economic Contributions
- Recognizes the significant role of expatriates in bolstering the country’s economy through remittances and investments.
- Fostering Transparency and Efficiency
- The IRIS system updates and swift resolution timelines reflect the FBR’s dedication to ensuring smooth transactions for overseas taxpayers.
Implications for Overseas Pakistanis
The move is expected to:
- Boost confidence among overseas Pakistanis in engaging with Pakistan’s real estate sector.
- Provide a more transparent and accessible framework for non-resident taxpayers.
- Strengthen ties between the Pakistani diaspora and the homeland.
Conclusion
The FBR’s tax exemptions is a clear signal of its focus on creating a supportive environment for overseas Pakistanis. By simplifying the tax processes and ensuring expedited approvals, the initiative not only fosters goodwill but also positions Pakistan’s real estate market as an attractive investment destination for its diaspora.