KARACHI: The Karachi Chamber of Commerce and Industry (KCCI) has strongly criticized the Federal Board of Revenue (FBR) for what it perceives as discriminatory treatment in the application of Section 7E concerning property sales.
In a statement released on Saturday, KCCI President Mohammed Tariq Yousuf lambasted the FBR for its unequal treatment of Section 7E under the Income Tax Ordinance 2001. The KCCI president demanded that Section 7E, which imposes taxes on deemed income from property sales, be extended to the entire country on par with Punjab, where it was recently withdrawn for both filers and non-filers.
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Yousuf emphasized that this discrimination unfairly targets the business community of Karachi, as the city is known for a majority of real estate transactions. He stated, “The business community of Karachi would suffer the most due to the complex Section 7E related to the sale or transfer of immovable property.”
Yousuf also noted that the Quetta Chamber of Commerce had obtained a stay order from the Baluchistan High Court, preventing the FBR from taking coercive measures based on Section 7E.
The KCCI president highlighted the FBR’s inconsistent approach, noting that in response to a Lahore High Court judgment, the FBR issued Circular No. 3 of 2023-24 on August 15, 2023, explicitly stating that Section 7E would not apply within the LHC’s jurisdiction, thereby exempting Punjab from the conditions outlined in Circular No. 1 of 2023-24 dated July 21, 2023.
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He further underscored that this is not the first time such discrimination has been faced by Karachi’s business community, which had also been denied access to cheaper Re-gasified Liquefied Natural Gas (RLNG) at the rate of US$9 per MMBtu, a privilege enjoyed by businesses in Punjab alone. Additionally, the Valuation Chart used for Karachi includes the constructed area, unlike for other regions, which Yousuf described as a significant bias.
Yousuf expressed concern that these actions might force Karachi’s business community to take to the streets in protest, potentially sending a negative message to foreign investors and damaging the economy. He urged the Chairman of the FBR to promptly withdraw Section 7E, a move that would receive widespread support from businesses not only in Karachi and Sindh but across the country.
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He added, “Chairman FBR must also take concrete steps to end all forms of discrimination in taxation laws that seem designed to burden only the business community of Karachi while the rest of Pakistan enjoys immunity.” Yousuf emphasized the need for tax reforms and simplification of the taxation structure to encourage more individuals to enter the tax net, rather than deter them with onerous regulations.
Yousuf recalled a previous visit by the FBR Chairman to KCCI, during which the possibility of out-of-court settlements was discussed. He expressed hope that the FBR would act promptly in the same spirit and take measures to address the concerns of Karachi’s business community.
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