Tax on fictitious income declared unconstitutional, Federal Constitutional Court declares Section 7E null and void
The Federal Constitutional Court has declared Section 7E of the Income Tax Ordinance unconstitutional and abolished the one percent tax imposed on fictitious income from property.
According to the daily Jang, according to the court’s decision, no citizen can be taxed without real income, only ownership of property cannot be considered income, therefore Section 7E is contrary to the Constitution.
The court clarified that this clause was illegal from the beginning.
Section 7E was introduced under the Finance Act 2022, according to which 5 percent of the value of immovable property was considered fictitious income and a tax of 20 percent was levied on it, which practically amounted to one percent of the total value of the property.
The Federal Constitutional Court accepted the appeals of the taxpayers while accepting several petitions, while the FBR and the Commissioner of Inland Revenue rejected the petitions.
The court also declared all notices and proceedings issued under Section 7E null and void.
Earlier, the Peshawar and Balochistan High Courts had declared Section 7E unconstitutional, while the Islamabad High Court had declared its sub-clause two null and void.
The single bench of the Lahore High Court had also accepted the petitions, but later the Division Bench rejected them, against which the taxpayers had filed appeals.
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