October 30, 2023 (MLN): The Supreme Court has extended the tax relief provision under section 7E to defer 50% of tax liability, offering taxpayers a reprieve amid pending petitions.
The matter at hand revolves around the court's earlier decision to allow taxpayers to defer 50% of their tax liability under Section 7E, for the tax year 2022-23, without facing any coercive action.
Previously, the Supreme Court had issued a detailed judgment on this section.
Accordingly, the Supreme court has granted an extension of a similar tax relief for the current tax year 2023-24 to the petitioner(s).
This decision follows ongoing proceedings related to past judgments and Constitutional Petitions.
What is Section 7E?
“Through Finance Act, 2022 section 7E was introduced whereby, for tax year 2022 and onwards, every resident person has been treated to have derived as income, an amount equal to 5% of the fair market value of the capital asset situated in Pakistan subject to exclusions of the capital assets provided under sub-section (2),” According to the circular notice issued by FBR on July 21, 2023.
The said deemed income is chargeable to tax at the rate of 20%, the effective rate of 1% of the fair market value of the immovable property, it added.
