Islamabad: The tax payment on deemed income on immovable properties by the Federal Board of Revenue (FBR) has been challenged in court, according to news published on September 12.
As per the details, a citizen has filed a petition requesting the court to allow the filing of income tax returns without the tax on deemed income basis on immovable properties. The court has directed the FBR to reply latest by September 13, since the taxpayer has to file income tax returns by September 30.
Moreover, another petitioner has questioned the constitutionality of Section 7E introduced through the Finance Act 2022. The citizen raised questions based on the legislative incompetence of the Parliament to approve law outside the scope of Entry 50 of the Federal Legislative List, Fourth Schedule of the 1973 constitution. It was highlighted that the Parliament is not competent to make laws and only the provincial legislature is eligible to tax immovable property.
Reportedly, the tax was imposed instead of the holding/owning of immovable property, equal to 5% of the fair market value of capital assets, by declaration as deemed income, which is perceived as an attempt to hoodwink the mandate of Entry 50. The court has requested an interpretation of Entry 50 in the context of Section 7E in order to resolve this issue.
It is pertinent to note that the FBR has mandated the citizens to pay tax on deemed income basis on immovable properties in their income tax return and wealth statement by September 30. As per the details, the owners of properties including builders, developers, investors, and real estate agents are bound to pay tax on immovable properties, under Section 7E of the Income Tax Ordinance 2001.
Iqra holds BS in International Relations and is passionate about writing engaging content on trending real estate topics. When not working, she is either spending time with family, shopping, or discussing shows & movies.
