Lahore High Court has declared the imposition of income tax on ‘deemed rental income’ of properties as illegal.
The petitioners’ counsel stated that the tax, which was implemented under the newly-inserted section 7E of the Income Tax Ordinance 2001, was not an income tax but a property tax.
The counsel pleaded that although the tax levied under newly-inserted section 7E of the Income Tax Ordinance, 2001, has been cleverly disguised by the Federal Board of Revenue (FBR) as an ‘income tax’, it is not a tax on income.
They claimed that property tax is the most significant source of revenue for local governments worldwide and that this was the first time the Federal Board of Revenue (FBR) had intervened in property taxes.
