ISLAMABAD: Federal Board of Revenue (FBR) has restricted the tax exemption on immovable property given to dependents of armed forces martyrs to single transaction.
The tax exemption was given under Section 236C of Income Tax Ordinance 2001. In a circular No 19, the FBR clarified the collection of advance tax on sale or transfer of immovable property under Section 236C of the Income Tax Ordinance, 2001.
The FBR said that Income Tax Ordinance (Amendment) Ordinance, 2016 was promulgated on July 31, 2016 whereby a new sub-section (4) was added in Section 236C of the ordinance relating to collection of advance tax on sales or transfer of immovable property.
The FBR said that some ambiguity/confusion prevailed with regard to the interpretation of the aforementioned sub-section, whereby, a plain reading of clause (b) of sub-section (4) created an impression that exemption from the applicability of Section 236C of the ordinance is available to any/every first sale of immovable property irrespective of qualification/conditions laid down in clause (a) of Sub-Section (4) of Section 236C of the ordinance which was not the intent of the legislature.
Therefore, cognizance of the same was taken and in order to remedy the situation sub-section (4) of Section 236C was omitted and a proviso was added in Sub-Section (1) of Section 236C was omitted and a provision was added in Sub-Section (1) of Section 236 of the Income Tax Ordinance, 2001 through the Tax Laws (Amendment) Ordinance, 2016 of August 31, 2016.
“The proviso added is manifest that exemption from collection of advance tax under Section 236C of the Ordinance shall be restricted to a singular transaction represented by the first sale of immovable property by a seller, who is the dependent of a martyr belonging to the armed forces, a person who dies while in the service of the Pakistan armed forces or the service of the Federal or Provincial Government in respect of immovable property acquired from allotted by the federal government, provincial government or any authority duly certified by the official allotment authority being in recognition of or for services rendered by the martyred or the person who dies in service.”
