Mohsin Siddiqui (Chief Reporter)
The government has broadened the scope of the withholding tax exemption on the sale of government-allotted immovable properties. This benefit will now extend to serving and retired armed forces personnel and federal and provincial government employees starting from July 1, 2024. This expanded exemption is part of the latest amendments made to Section 236C of the Income Tax Ordinance, 2001, through the Finance Act, 2024.
Previously, the withholding tax exemption was restricted. Originally introduced in 2016, the exemption was specifically granted to dependents of Shaheed—those who lost their lives in the service of the Pakistan Armed Forces or during their tenure in the federal or provincial government. This exemption was applicable only to the first sale of immovable properties acquired from or allotted by the federal or provincial government, or any authority certified by the official allotment authority. This recognition was meant to honor the services rendered by Shaheed or those who died in service.
The expansion under the Finance Act, 2024, marks a pivotal change. Now, the withholding tax exemption on first sales of immovable properties is available to a broader category. It includes war-wounded personnel in the service of the Pakistan Armed Forces, as well as serving and retired personnel of the armed forces. Additionally, ex-employees and current personnel of the federal and provincial governments are now eligible for this tax exemption.
The decision to extend this exemption aims to provide substantial financial relief and acknowledgment to those who have dedicated their lives to serving the nation. The inclusion of war-wounded personnel recognizes their sacrifices and ensures they receive the necessary support. For serving and retired armed forces personnel, as well as federal and provincial government employees, this exemption offers a significant financial advantage when selling government-allotted properties.
Information Minister Ataullah Tarar, in a recent press conference, shed light on the rationale behind this expanded exemption. Responding to questions regarding the exemption for families of deceased military personnel (Shuhada) and retired high-ranking bureaucrats (Grade-22), Minister Tarar explained that the armed forces already provide for the families of Shuhada. This additional tax break serves as an extra layer of support.
Minister Tarar further elaborated on the importance of this exemption for bureaucrats. Those who have dedicated their entire careers to public service often receive a single plot of land upon retirement. This tax exemption is a form of recognition for their lifelong service, offering them financial relief and acknowledging their contributions to the nation.
This expanded scope of withholding tax exemption is expected to have a positive impact on the morale and financial stability of armed forces personnel and government employees. By reducing the financial burden associated with the sale of immovable properties, the government aims to provide tangible support to these individuals and their families.
Additionally, this move could potentially encourage more individuals to pursue careers in the armed forces and government sectors, knowing that their service will be recognized and rewarded. The expanded exemption reflects the government’s commitment to honoring and supporting those who have served the nation with dedication and bravery.
