The Federal Board of Revenue has introduced a major facilitation measure for the construction sector by setting a strict seven-day deadline for issuing withholding tax (WHT) exemption certificates to eligible builders and developers. This move is part of a broader effort to streamline tax procedures and reduce financial pressure on those operating under the special tax regime defined in the Income Tax Ordinance 2001.
According to the newly issued circular, builders and developers who have already fulfilled their tax obligations under Section 7F can apply for exemption from withholding tax under Section 236C, which typically applies to the sale of immovable property. The FBR clarified that these applicants must submit their requests to the relevant Commissioner Inland Revenue after meeting all required conditions.
A key highlight of the policy is the introduction of an automatic approval mechanism. If the Commissioner fails to process the application within seven working days, the exemption certificate will be automatically issued through the IRIS system. This step is expected to significantly reduce delays and improve transparency in the tax process.
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The decision addresses a long-standing concern within the real estate sector. Under the special tax regime, builders and developers pay tax based on a fixed percentage of their gross receipts. However, the application of withholding tax under Section 236C often created additional financial strain, particularly for those without other taxable income to adjust the collected tax against. By allowing exemptions in such cases, the FBR aims to ease liquidity pressures and encourage smoother business operations.
The circular also directs tax officials to review applications carefully on a case-by-case basis, ensuring that only eligible applicants benefit from the exemption. At the same time, the streamlined timeline ensures that genuine cases are not delayed unnecessarily.
Overall, this policy update reflects the government’s intent to support the construction and development sector, which plays a vital role in economic growth, job creation, and urban development across Pakistan.
