ISLAMABAD – Federal Board of Revenue (FBR) has announced new relief measures aimed at supporting property developers and builders by simplifying the process for obtaining withholding tax exemption certificates.
Under the new directive, tax authorities are required to issue exemption certificates within seven working days to developers who have already fulfilled their tax obligations under the special tax regime.
According to the latest circular, if a complete application is submitted and all required conditions are met, but the concerned Commissioner fails to respond within the specified timeframe, the exemption certificate will be automatically issued through the IRIS system.
The clarification relates to provisions under Section 236C of the Income Tax Ordinance, which deals with advance tax on property transactions, and Section 7F, which governs a special tax regime for builders and developers. Under Section 7F, developers are taxed based on a fixed percentage of gross receipts rather than conventional profit-based calculations.
Developers had previously raised concerns about the application of withholding tax under Section 236C, noting that it often creates liquidity challenges. Since income under the Section 7F regime is treated as business income, many developers face difficulty adjusting the withheld tax due to limited taxable income, resulting in added cash flow pressure.
The FBR has clarified that developers and builders who have fully paid their tax liability under Section 7F and have no other taxable income are eligible to apply for exemption from advance tax collection.
Eligible applicants must submit their requests under Section 159 to their respective Commissioner Inland Revenue. Each application will be reviewed individually, with decisions made based on compliance with the legal requirements.
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