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FBR Embraces LHC Ruling: Lahore’s Jurisdiction Now Includes Extended Section 7E Exemptions

The Federal Board of Revenue (FBR) has swiftly embraced the recent Lahore High Court (LHC) ruling, effective August 16. This pivotal decision centers around Section 7E of the Income Tax Ordinance 2001, introducing a significant shift in its application within Lahore’s jurisdiction.

Under this adoption, the FBR confirms that Section 7E exemptions now encompass cases within the territorial confines of the Lahore High Court, spanning both filers and non-filers.

In response to the LHC’s ruling, the FBR has streamlined the exemption certificate procedure outlined in Section 7E through Circular No. 3 of 2023. This simplification extends to diverse taxpayer categories, including non-resident individuals, as detailed within Section 7E concerning deemed income taxation.

Renowned real estate analyst Muhammad Ahsan Malik clarifies that property transfers within Punjab will be unaffected by Section 7E, irrespective of filer status. Consequently, exemptions from the Commissioner of Inland Revenue will not be required for these transactions.

Non-resident individuals, encompassing overseas Pakistanis, are now exempt from immovable property tax as governed by Section 7E, with the circular rationalizing the exemption certificate process. This temporary measure serves until the implementation of an automated system.

To address queries arising from this transition, the FBR modifies and extends Circular No. 1 of 2023-24, ensuring a smoother implementation of the introduced sub-section (2A).

In this progressive move, the FBR aims to foster clarity and efficiency in taxation matters, aligning with the evolving needs of taxpayers within Lahore’s extended jurisdiction.

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