The Federal Constitutional Court has ruled that Section 7E of the Income Tax Ordinance is unconstitutional, putting an end to the disputed 1% deemed income tax on immovable properties.
Introduced through the Finance Act 2022, Section 7E allowed the Federal Board of Revenue (FBR) to treat certain properties as if they were generating income equal to 5% of their market value and charge tax accordingly.
This meant property owners had to pay about 1% of their property’s value each year, even if the property was vacant or not earning any rent.
The ruling is being seen as a major relief for Pakistan’s real estate sector, with expectations of improved investor confidence and reduced holding costs for property.
Yet, industry experts point out that long-term market growth will still depend on economic stability, keeping inflation in check, ongoing development, and investor sentiment. sentiment.
