ISLAMABAD: The Federal Constitutional Court (FCC) on Thursday set aside Section 7E of the Income Tax Ordinance (ITO) 2001 as ultra vires the Constitution, which had empowered tax authorities to levy tax on “deemed income” from assets and properties.
Having a significant impact on the Federal Board of Revenue’s (FBR) property taxation, Section 7E was introduced through the Finance Act, 2022, for the tax year 2023.
It provided for taxation on deemed or notional income arising from ownership of cer
Major blow to FBR’s tax collection plans. Section 7E was controversial from day one – taxing deemed income on property was always constitutionally questionable. FBR needs to go back to the drawing board.
This ruling will have huge implications for the budget. The government was counting on revenue from Section 7E. Now they’ll either appeal or find another way to tax property holders.