I wish to know tax calculation on property sale for overseas Pakistani widow.

Question

I am an overseas Pakistani widow. I want to sell my house in Lahore. This house was purchased more than 10 years ago.

I appreciate your guidance on tax calculations that are required to pay and any exemptions applicable to my case.

Answer 1

As an overseas Pakistani widow selling a house held for over 10 years, here is a concise summary of your tax position:

• Capital Gains Tax (CGT): 0%. Because you have held the constructed property for more than four years, the tax rate on your profit is 0%.
• Advance Tax on Sale (Section 236C): This tax is collected at the time of transfer.
  • If you are on the Active Taxpayers' List (ATL): The rate is 3% of the sale value (up to Rs. 50 million).
  • If you are NOT on the ATL: The rate is significantly higher, starting at 10.5%.
• Exemption from Filing: As a widow and a non-resident, you are not required to file an income tax return solely because you own a property of 500 square yards or more.
• 15-Year Exemption: If you have held the property for at least 15 years and meet specific recording requirements, you may apply for a certificate to be exempt from the 236C advance tax entirely.
• Final Discharge for Overseas Pakistanis: If you originally bought the house using a Foreign Currency Value Account (FCVA) or NRVA, the tax collected at the time of sale (under 236C) is considered the final discharge of your tax liability regarding that property.

Recommendation: Verify if you have reached the 15-year holding mark to potentially avoid the 3% transfer tax, and check your status on the Active Taxpayers' List to ensure you pay the lowest possible rate.