Stay Order on 7E Tax in Punjab

Aug 16, 2023-Pakistan- According to an income tax circular released by the FBR on Tuesday, August 15, 2023, section 7E will not be applied for the sale of immovable properties in Punjab, regardless the seller is a filer or nonfiler of income tax returns. The seller is no longer obliged to go to the Commissioner of Inland Revenue to get the exemption certifications.

The FBR has announced that overseas Pakistani are not required to pay tax on immovable properties under Section 7E of the Income Tax Ordinance 2001. However, the FBR will additionally issue another comprehensive circular after implementing an automated procedure on the FBR Portal for acquiring the 7E certificate and easing the sale and transfer of the property.

The FBR also said in its circular that the transferring authority of immovable property would keep a proper record of the seller/transferor data as well as essential documentation with regard to properties under sale/transfer covered under these specified conditions.

Starting from the date of publication of this circular, the transferring authority will communicate the aforementioned data record with the appropriate chief commissioner IR of the Regional Tax Office having jurisdiction over the seller/transfer on a weekly basis.

Exemptions of 7E Tax:

This ordinance does not apply to immovable property owned by a local authority, a development authority, and builders and developers who are registered with the Directorate General of Designated Non-Financial Business and Professions (DNFBP).

The rules of Section 7E do not apply to a property purchased in the first year for which tax under Section 236K has been paid in full by the purchaser. In such a circumstance, the seller/transferor of a property would provide the transferring authority with a Computerised Payment Receipt (CPR) with a unique CPR number, containing the seller’s or transferor’s name, CNIC number, and stating the tax paid under Section 236K, date of payment, and tax year.

The provisions of Section 7E of the Income Tax Ordinance, 2001 do not apply to an immovable property allotted to a Shaheed or dependents of a Shaheed belonging to the Pakistan Armed Forces; a person who dies while in the service of the Pakistan Armed Forces or the federal or provincial government; a war wounded person while in the service of the Pakistan Armed Forces or the federal or provincial government; an ex-serviceman and serving personnel of armed forces or ex-employees or serving personnel of federal and provincial government.

However, it will be the seller’s or transferor’s obligation to give documentation to the transferring authority if they fall under one of the aforementioned categories. To download the exact circular of FBR, please click on below button.