New Government Condition for Property Sellers: Section 7E Tax Compliance

Introduction to the New Government Condition for Property Sellers

The government has recently implemented a significant condition for sellers or transferors of immovable properties, necessitating them to provide proof of tax payment under section 7E of the Income Tax Ordinance 2001 to registration/transfer authorities.
This condition was introduced through the Finance Bill 2023, bringing forth new provisions to regulate property transactions and tax compliance.
Registration, recording, or attestation of any transfer of immovable property by responsible individuals is now contingent upon the discharge of tax liability by the seller or transferor under section 7E of the Income Tax Ordinance 2001.
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According to the newly added sub-section (2A) through the Finance Bill 2023, individuals responsible for property transfer are prohibited from registering, recording, or attesting any transfer unless the seller or transferor has fulfilled their tax obligations under section 7E. Evidence of tax payment must be furnished to the concerned person in the prescribed mode, form, and manner.
Starting from tax year 2022, a tax will be levied on the income specified under section 7E (tax on deemed income) of the Income Tax Ordinance 2001, as per the rates specified in Division VIIIC of Part-I of the First Schedule.
For a resident person, the income chargeable to tax under section 7E will be equivalent to 5 percent of the fair market value of capital assets located in Pakistan on the last day of the tax year, excluding specific situations as specified in the law.

Source: propakistani.pk