ISLAMABAD: The Federal Constitutional Court (FCC) on Thursday set aside Section 7E of the Income Tax Ordinance (ITO) 2001 as ultra vires the Constitution, which had empowered tax authorities to levy tax on “deemed income” from assets and properties.
Having a significant impact on the Federal Board of Revenue’s (FBR) property taxation, Section 7E was introduced through the Finance Act, 2022, for the tax year 2023.
It provided for taxation on deemed or notional income arising from ownership of cer
FCC sets aside Income Tax Ordinance section enabling taxation on ‘deemed income’ from assets and property
Byadmin
May 7, 2026
Deemed income taxation was always going to face legal challenges. FCC did the right thing setting it aside.
This section was deeply unfair – taxing people on income they haven’t actually earned. Good riddance.
Taxation should always be based on real income, not assumed income. Victory for due process.
FBR needs to focus on broadening the tax base instead of these unconstitutional revenue measures.