ISLAMABAD: The Federal Board of Revenue (FBR) has taken a significant step towards simplifying property transactions and ensuring tax compliance by releasing comprehensive guidelines on tax payments for property sellers and transferors.
The new guidelines, issued under Income Tax Circular no. 01 of 2023-24, are a result of a crucial amendment introduced in the Finance Act 2023.
According to the amendment, the transfer of any immovable property is subject to concrete evidence demonstrating that the seller or transferor has fulfilled their deemed income tax liability related to the property in question.
For taxpayers who are on the Active Taxpayers List (ATL) and have not paid the tax alongside their income tax return for the tax year 2022, they must make the payment using a separate payment challan (CPR) available in the FBR online payment system.
This payment receipt will serve as evidence for the newly added sub-section (2A) of section 236C of the ordinance.
On the other hand, taxpayers on the ATL who have already declared the property and paid the tax under section 7E in their tax return for the tax year 2022 or are exempt from the tax due to a court order, must obtain a certificate (Form ‘A’) from the Commissioner Inland Revenue with jurisdiction over them.
This certificate will act as evidence for the aforementioned new sub-section (2A) of section 236C.
To obtain the required certificate, taxpayers need to fill in the necessary details in Form ‘A’ and submit it to the Commissioner of Inland Revenue.
The commissioner will review the information and issue the certificate within seven days, ensuring a smooth and expedited process.
In cases where a property is co-owned by multiple individuals, each person is responsible for fulfilling their tax liability under section 7E based on their respective share in the property.
For non-ATL individuals, the tax payment under section 7E must be made, and evidence of payment should be provided to the transferring authority using the separate payment challan provided in the FBR online payment system.
The payment receipt will serve as evidence for the newly added sub-section (2A) of section 236C.
Furthermore, the introduction of Section 7E in the Income Tax Ordinance 2001 in 2022 mandated a 20% tax on properties valued at over Rs25 million for resident individuals.
This tax applied to properties held in the tax year 2022 and onwards, with some exceptions.
However, the section faced opposition from many taxpayers, leading to various cases filed in provincial high courts.
The Supreme Court has granted permission for taxpayers to appeal against the Sindh High Court’s decision, and a temporary stay order has been issued in favor of the appellants, provided they deposit 50% of the demanded tax amount.
Source: DAWN
