SC Grants Interim Relief For Deemed Income Tax on Real Estate Properties
On Wednesday March 22, 2023, Pakistan’s Supreme Court granted temporary relief against a 20 percent property income tax, which would partially reduce revenue collection, as tax officials have nine months to meet the revenue target. A week before the target was to achieve by the FBR. However, Supreme Court of Pakistan puts restrictions on the Income Tax on Real Estate Properties to give time.
SCP Gives Favour to Real Estate Sector
A special bench headed by Chief Justice of Pakistan Justice Umar Atta Bandial allowed real estate taxpayers to pay 50 percent income tax pending the Supreme Court’s final decision. The court made strong observations regarding the functioning of the Federal Board of Revenue and its focus on the already limited tax payer base to achieve its intended goals. Supreme of Pakistan directed FBR to give grace period to real estate taxmen because of current slowdown in the real estate sectors.
Strong Elaboration Given By Opponent Lawyer of FBR
Former president Faisal Siddiqui, representing FBR’s constituency in the intermediate state. Sought a constitutional mandate to put the case against FBR.
He elaborated, the real estate and manufacturing sector has fought against Section 7E, which was introduced in June. Last year to levy income tax on individuals earning up to 5% of the fair market value of capital assets in Pakistan.
FBR, for the first time with Rs.15 billion in effective foreign exchange assistance program at just under 1%. Relying on Rs.25 billion in the past, the government has been able to create ambitious sector-wide initiatives, but has been able to secure annual tax fee.
How Section 7E Helps Taxpayers?
Section 7E faced serious constitutional challenges from its inception, with many arguing that it might be difficult. For the government to defend a provision subject to state taxation in court. The case was also challenged in the Lahore High Court, which in its interim order. Wrote that the Section 7E Tax is based on the “assessed value of the property” which is contrary. To Section 116 on assessed property with certificate of the taxpayers with the tax return.
The petitioners emphasized before the Supreme Court whether Section 7E is inconsistent with Section 47 and Entry 50. Fourth article of the 1973 Constitution, as it cannot be treated as income from property. Is not a provision of the existing property that rules on the market value of the real estate.