Experts criticise new FBR condition for overseas Pakistanis on property transactions

ISLAMABAD: The Federal Board of Revenue has introduced new requirement for overseas Pakistanis, mandating them to get approval from Inland Revenue to verify their non-resident status.

According to Business Recorder, this approval is crucial for them to qualify for lower tax available to filers during transfer of an immovable property.

Non-resident Pakistanis were exempt from certain requirements until June 30. However, the FBR has now removed non-resident category from online portal and replaced it with a late filers category sparking concerns among tax experts.

A real estate expert said that while the Finance Act 2022 exempts some non-residents from filing income tax returns, they may still face difficulties. Since they are not listed on the active taxpayers’ list (ATL), they risk being subjected to higher tax rates under the Tenth Schedule of the Ordinance.

To address this, the FBR clarified that non-resident Pakistanis holding Pakistan Origin Cards (POC) or National Identity Cards for Overseas Pakistanis (NICOP) would not be subject to certain provisions, such as sections 100BA and rule 1 of the Tenth Schedule, when engaging in property transactions under sections 236C and 236K.

However, experts criticise the new condition for non-residents to get Commissioner Inland Revenue’s approval, arguing that it adds unnecessary complexity.

Real estate experts also question the need for this change, saying that previous system already included exemptions for overseas Pakistanis. He dismissed rumours circulating on social media, stating that no new exemptions have been granted under the updated rules.

Non-resident taxpayers wishing to claim exemptions under clause 111AC must now upload their POC or NICOP when generating a withholding tax challan.

Once submitted the system will create a provisional tax payment slip (PSID), which will be forwarded to relevant Commissioner Inland Revenue (CIR) for verification of the taxpayer’s non-resident status.

This new condition has drawn criticism from various stakeholders, who argue that it creates unnecessary hurdles for overseas Pakistanis rather than simplifying tax compliance.

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