Islamabad: According to news reported on August 16, the Federal Board of Revenue (FBR) has implemented the Lahore High Court's (LHC) decision regarding Section 7E of the Income Tax Ordinance 2001. Section 7E will no longer be applicable to cases (both filer and nonfiler) under the jurisdiction of the LHC.
The FBR eliminated the need for exemption certificates from the Commissioner of Inland Revenue in a recent income tax circular. According to Section 7E (tax on deemed income basis), which applies to a variety of taxpayer groups, including non-resident individuals, this modification is effective immediately.
No matter whether the transfer of property is within Punjab or outside of Punjab, Section 7E would not apply, according to sources citing real estate expert Muhammad Ahsan Malik. Therefore, exemptions from the Commissioner of Inland Revenue won't be necessary in Punjab situations. The FBR loosened the procedural requirements established in Section 7E in Circular No. 3 of 2023. The circular makes it clear that, unless the LHC's judgement in WP no 52559 of 2022 is overturned, it applies to instances that fall under its purview.
Section 7E now exempts non-resident people, including non-resident Pakistanis, from paying tax on real estate. The Inland Revenue Commissioners' prescribed exemption certificate procedure is simplified by the circular. Until an automated method is created, this explanation circular makes property sale or transfer procedures simpler. In some circumstances, the terms of Circular No. 1 of 2023-24 won't apply, but the transferring authority will keep seller/transferor records shared with the appropriate tax authorities.