ISLAMABAD: The Federal Board of Revenue (FBR) has revised the previous circular for enhancing clarity on the taxation of deemed income arising from the sale or purchase of immovable property.
According to circular no. 03 of 2023, released on Wednesday, this amendment modifies the provisions outlined in circular no. 01 of 2023. It noted an exemption from deemed income taxation solely for the year 2022 within Punjab, while the tax will apply to transactions of this nature in 2023.
A significant development in this context occurred in April when the Lahore High Court rendered the taxation of deemed income illegal in the province.
The provisions outlined in Section 7E exclusively pertain to resident individuals as per the definition established in Section 82 of the Income Tax Ordinance 2001. Consequently, non-resident individuals, including non-resident Pakistanis, are not obliged to adhere to tax liabilities under Section 78. Therefore, the conditions stipulating the method and manner of furnishing evidence to the property transferring authority do not extend to non-resident individuals.
Nevertheless, non-resident individuals engaging in the sale or transfer of immovable property are required to submit Form-B, duly completed, along with scanned copies of a valid passport. Non-resident Pakistanis must provide, in addition to Form-B, scanned copies of a valid passport, CNIC, NICOP/POC to the transferring authority.
The transferring authority is tasked with effecting property transfers following verification of the credentials disclosed in Form-B.
Published in Dawn, August 17th, 2023
