Tax Bar Association urges FBR to address discriminatory enforcement of tax on immovable properties in Punjab and Sindh

The Pakistan Tax Bar Association (PTBA) has urged the Chairman of the Federal Board of Revenue (FBR) to address the ongoing discriminatory enforcement of Section 7E of the Income Tax Ordinance, 2001, concerning the tax on immovable properties in Punjab and Sindh, according to a news report. 

Section 7E, introduced through the Finance Act of 2022, levies a tax on deemed income from capital assets, set at 5% of the fair market value of immovable properties. 

While this tax applies to all of Pakistan, the PTBA noted that taxpayers in Islamabad, Khyber Pakhtunkhwa (KPK), and Balochistan are not being pursued for tax payments, as various High Courts have ruled that Section 7E is ultra vires, or beyond the scope of the federal government’s powers. Conversely, taxpayers in Punjab and Sindh are being issued notices and compelled to pay this tax, despite the High Court rulings in other regions.

The issue has sparked concerns over the constitutional implications, with PTBA stressing that the federal tax should be applied uniformly across the country. High Court decisions have already declared Section 7E ultra vires in multiple jurisdictions, including Sindh, Lahore, Islamabad, and Peshawar, yet the FBR has continued to enforce the levy in provinces where relief has been granted. 

The PTBA has called on FBR to ensure that taxpayers in Sindh and Punjab are not treated differently from those in other provinces, highlighting the constitutional rights of taxpayers under Articles 4, 8, 10A, and 25 of Pakistan’s Constitution.

The situation remains unresolved as the Supreme Court of Pakistan has yet to issue a final ruling on the matter, though it has not suspended the operation of the High Court judgments. 

As appeals are now pending before the Federal Constitutional Court, the PTBA’s appeal for fairness and consistency in enforcement remains critical.