Are you eligible for tax exemptions, lower tax rates, or tax credits in Pakistan? The Federal Board of Revenue (FBR) has streamlined the procedure for issuance of exemption or lower rate certificates during tax year 2026. Understanding the process can save time and ensure compliance.
Section 159: Tax Exemption or Lower Rate Certificate
According to Section 159 of the Income Tax Ordinance, 2001, the Commissioner may issue an exemption or lower rate certificate in the following cases:
1. Eligibility:
o Amounts exempt from tax under the Ordinance.
o Amounts subject to a tax rate lower than specified in the First Schedule.
o Amounts eligible for 100% tax credit.
2. Application Procedure:
o Eligible taxpayers must submit a written application in the prescribed form to the Commissioner.
o For companies, the FBR is required to issue the certificate within fifteen days of application.
o If no action is taken, the certificate is automatically deemed issued after fifteen days through the FBR’s IRIS system.
3. Special Certificates:
o Profit on debt: Individuals whose income is not chargeable to tax can request an exemption certificate for profit on debt under Section 151.
o Capital gains on residential property: Individuals whose property has been for personal use for 15 years may apply for exemption under Section 236C. This certificate is issued once every fifteen years.
4. Compliance:
o Any person required to collect or deduct tax must comply with the certificate.
o Certificates issued via IRIS may be modified or canceled with written notice, providing an opportunity to be heard.
Tips for Taxpayers
💡 Check eligibility: Determine if your income or transaction qualifies for exemption.
💡 Use IRIS: Apply online to speed up the process.
💡 Keep documentation: Maintain proof of application and certificate for record-keeping.
💡 Stay updated: Notifications issued under previous sub-sections remain valid unless rescinded by the Board.
By following these guidelines, taxpayers can efficiently claim exemptions or reduced tax rates while staying fully compliant with FBR rules for tax year 2026.
Disclaimer: This article is for informational purposes only. Consult a tax professional or the FBR for official guidance on tax exemption certificates.