08/09/2023
ISLAMABAD: Federation of Pakistan Chambers of Commerce & Industry (FPCCI) has formally asked the Federal Board of Revenue to withdraw tax on Immovable property under Section 7E.
According to Acting President of FPCCI, Muhammad Suleman Chawla, the entire business, industry, and trade community of Pakistan is of the view that the Section 7E introduced in Income Tax Ordinance (ITO) 2001 has proven to be chaotic for the economic activities.
Under Finance Act, 2022, section 7E was introduced in the Income Tax Ordinance 2001 whereby, for tax year 2022 and onwards, every resident person has been treated to have derived as income, an amount equal to five per cent of the fair market value of the capital asset situated in Pakistan subject to exclusions of the capital assets provided in the law.
The deemed income is chargeable to tax at the rate of 20 per cent. What this means is that on rent or not, anyone who has sizable real estate would pay 20% tax on 5% of the fair market value of that property. This 5% is treated as potential rented income.
