DHA Lahore’s New Tax Policies for Overseas Pakistanis: Implementation & Exemptions Explained

DHA Lahore’s New Tax Policies for Overseas Pakistanis: Implementation & Exemptions Explained

In this blog, we explore DHA Lahore’s new tax policies for overseas Pakistanis, including Sections 236C, 236K, and Rule 7E exemptions. Learn the streamlined processes for non-resident verification and property transfers in Pakistan. These policies, including Sections 236C and 236K, and Rule 7E, have brought significant changes in the taxation and property transfer procedures. This article provides a comprehensive explanation of these updates and offers insights into their implementation process.

Who Qualifies as a Non-Resident?

Under Pakistani law, a non-resident is defined as an individual who spends more than 180 days outside Pakistan in a calendar year. Non-residents are commonly referred to as “overseas Pakistanis.” Their tax rates differ from those of resident Pakistanis, and the latest changes emphasize streamlined procedures for confirming non-resident status.

Key Updates to Tax Policies

1. Sections 236C and 236K

• 236C: Applicable to sellers of property.
• 236K: Relevant for buyers of property.
• Non-residents are charged at the filer tax rate (3%), exempting them from the higher non-filer tax rate.

Changes in Determining Non-Resident Status:

Previously, transfer authorities like DHA determined non-resident status by verifying an individual’s passport and travel history. However, the Federal Board of Revenue (FBR) now makes this determination through its systems.

Implementation Process:

1. Generate a provisional PSID (Payment Slip ID) via the FBR’s Iris system.
2. Provide required documents:
   • Passport copy
   • Local Pakistani mobile number
   • Email address
3. Submit these details through your lawyer or vendor.
4. FBR confirms the non-resident status within 1-2 days, after which a final PSID is issued.
5. Pay the tax based on the filer rate (3%).

2. Rule 7E

Non-residents remain exempt from Rule 7E. Transfer authorities no longer verify exemptions; instead, FBR oversees the process. The exemption ensures that property transfers for non-residents avoid unnecessary complications.

Updated Process for Transfers:

• For Purchases: A stamp paper authorization must now be issued by the non-resident. This authorization can be submitted digitally, eliminating the need for physical submission.
• For Transfers: Vendors must include a clear statement on stamp paper authorizing representatives to complete the transfer process on behalf of non-residents.

Simplified Procedures for Overseas Purchasers

Previously, a simple undertaking on stamp paper sufficed for property purchases. Now, overseas buyers must issue a formal authorization, which:

• Clearly names the authorized representative.
• Includes CNIC details.
• Confirms the buyer’s intention to transfer property through a designated person.

Digital submission methods like email or WhatsApp are encouraged, ensuring quicker processing times.

Conclusion

The updated tax policies and procedural changes for overseas Pakistanis aim to enhance transparency and efficiency in property transactions. By centralizing non-resident verification through the FBR and digitizing submission methods, these changes streamline processes while safeguarding the interests of overseas Pakistanis.