FPCCI Demands Abolishing Deemed Income Tax Under Section 7E

FPCCI Demands Abolishing Deemed Income Tax Under Section 7E

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has called on tax authorities to abolish the deemed income tax under Section 7E of the Income Tax Ordinance, 2001.

FPCCI President Atif Ikram Sheikh articulated the widespread demand from the business, industry, and trade communities, arguing that Section 7E is both unproductive and unfair as it imposes tax on deemed or imaginary income from immovable properties.

FPCCI Chief Sheikh highlighted that Section 7E has not resulted in any significant increase in tax collection but has instead created chaos and dissatisfaction in the otherwise vibrant real estate sector. “This section has only added to the discontentment among property owners without contributing meaningfully to the national exchequer,” he stated.

In addition to the abolition of Section 7E, FPCCI President Sheikh advocated for the establishment of a Real Estate Regulatory Authority (RERA) in Pakistan, similar to those in other regional countries. He emphasized that such a regulatory body is crucial for the optimal performance and contribution of the real estate sector to the national economy. “However, this should be done in consultation with stakeholders from the sector to ensure its effectiveness and acceptance,” he added.

Sheikh also pointed out the Sindh government’s collection of infrastructure cess at the import stage, which is set at 1.25 percent and generates approximately PKR 225 billion annually. He argued that a significant portion of this revenue should be allocated to the infrastructural development and maintenance of Karachi. “If spent wisely, this could vastly improve the real estate landscape of Karachi and stimulate market activity,” he noted.

Saquib Fayyaz Magoon, Senior Vice President of FPCCI, emphasized the potential of the real estate sector to attract foreign exchange through remittances. He suggested that the sector should focus on drawing investment from overseas Pakistanis, which would help stabilize the rupee-dollar parity and boost foreign exchange reserves. “Any sector that can contribute to inward remittances should be facilitated and encouraged by the government,” Magoon urged.

Syed Saquib Shah, Convener of FPCCI’s Central Standing Committee on Real Estate Property and Builders, underscored the need for systemic reforms and better facilitation of the real estate sector. He called for the digitalization of the property registration system to enhance transparency, fairness, and validity in property documentation. Shah also advocated for the introduction of an e-stamp system in Karachi, similar to the one implemented in Punjab, to streamline the process.

Shah criticized the current tax policies, asserting that they unfairly target property owners and real estate agents. “These taxes are causing stagnation and disenchantment in the industry. It is crucial to impose taxes on property owners rather than on agents who merely provide services to buyers and sellers,” he concluded.