Discrimination in Federal Taxation | FBR | Tax on Deemed income | Rules for implementation of 7E

This video is made to highlight the skewed policies of the Federal Board of Revenue (FBR) in connection with the newly made rules for transfer of property vis-à-vis payment of tax on deemed income under section 7E of the Income Tax Ordinance, 2001 (Ordinance).
Under section 236C of the Income Tax Ordinance 2001(the Ordinance), any person responsible for registering, recording, or attesting transfer of any immovable property has been designated as the person responsible
to collect advance adjustable Income tax from the seller or
transferor. The rate of tax collection is 3% of the gross amount of the consideration received by the seller or transferor in case of seller's/transferor's name if appearing on the Active Taxpayers' List (ATL) and 6% in case of non-ATL seller/transferor.
Through Finance Act, 2022 section 7E was introduced whereby, for tax year 2022 and onwards, every resident person has been treated to have derived as income, an amount equal to 5% of the fair market value of the capital asset situated in Pakistan subject to exclusions of the capital assets listed under sub-section (2). This income is taxable at the rate of 20%.
Finance Act 2023 has introduced a new sub-section (2A) in section 236C of the Ordinance which places a bar on the transferring authority for registering, recording or attesting transfer of any immovable property unless the seller or transferor has discharged his tax liability under section 7E of the Ordinance and evidence to this effect has been furnished to the transferring authority in the prescribed mode, form and manner.
The following instructions are issued for catering for situations arising out of change in law prescribing mode, form and manner of collection of payment of tax u/s 7E:
(A) Where the seller or transferor is on ATL:
The said seller or transferor will provide evidence to the transferring authority that he has discharged his liability u/s 7E in any of the following modes:
If the seller/transferor has not already paid the tax u/s 7E along with his
income tax return filed for TY 2022 onwards, then, such person is required to pay the due amount of tax payable under section 7E of the Ordinance
and produce evidence to the transferring authority. For this purpose, a
separate payment slip (PSID) has been provided in FBR online
payment portal . The payment made into government treasury through
CPR in this regard will be treated as evidence for the purpose and to the
extent of newly inserted sub-section (2A) of section 236C of the
Ordinance; or if the seller / transferor has already declared the said property in his
declaration u/s 7E filed along with his income tax return for tax year
2022 or the said seller/transferor is not required to pay tax u/s 7E,
then the seller / transferor will furnish a certificate annexed as Form 'A' to this circular duly issued by the Commissioner Inland Revenue holding jurisdiction
over the seller/transferor. The certificate issued by the Commissioner
Inland Revenue will be treated as evidence for the purpose and to the
extent of newly inserted sub-section (2A) of section 236C of the
Ordinance.

If the seller / transferor has already declared the said property in his
declaration u/s 7E filed along with his income tax return for tax year
2022 or the said seller/transferor is not required to pay tax u/s 7E,
then the seller / transferor will furnish a certificate annexed as Form 'A' to this circular duly issued by the Commissioner Inland Revenue holding jurisdiction over the seller/transferor. The certificate issued by the Commissioner Inland Revenue will be treated as evidence for the purpose and to the extent of newly inserted sub-section (2A) of section 236C of the
Ordinance.
In order to remove the difficulties in this regard the FBR has directed Commissioners Inland Revenue to issue this certificate in two days.
(B) Where the seller/transferor is a non-ATL person:
Such person is required to pay the due amount of tax payable under
section 7E of the Ordinance and provide evidence to the transferring
authority. The slip for payment of these taxes (PSID) can be filled online on the payment portal of FBR and payment could be made against this PSID physically in banks or online transfer.
Now the FBR has excluded the province of Punjab from the implementation of this section under the excuse of an order of the Honourable Lahore High Court in a Writ Petition mentioned in the video, this move of the FBR has been widely been criticized on the basis of discrimination in implementing the tax laws in different parts of the country. This video is aimed at highlighting this move to educate viewers as regards the harmonious way to be adopted under the Constitution of Pakistan in implementing laws.