Federal Constitutional Court Strikes Down Property Tax Section 7E, Declares It Unconstitutional

Islamabad — The Federal Constitutional Court has delivered a landmark judgment by declaring Section 7E of the Income Tax Ordinance unconstitutional and nullifying it entirely, bringing major relief to the real estate and construction sectors.
According to media reports, a bench headed by Chief Justice Aminuddin Khan heard appeals related to taxation on immovable properties and announced a short verdict after completing proceedings. The court rejected all petitions filed by the federal government seeking to uphold the law.
The court ruled that Section 7E, which imposed tax on immovable properties and under-construction buildings, was in violation of the Constitution. As a result, all actions and tax recoveries carried out by the Federal Board of Revenue (FBR) under this section have now lost their legal standing.
Previously, different High Courts had issued varying judgments on the matter—Peshawar, Balochistan, and Islamabad High Courts had declared the provision illegal, while the Lahore High Court had upheld it. The latest ruling by the Federal Constitutional Court has now resolved the legal ambiguity.
The disputed tax had placed significant pressure on Pakistan’s real estate sector, with investors repeatedly expressing concerns over its impact on property transactions and development projects. Industry stakeholders believe the decision will revive investment activity and ease financial pressure on ongoing construction projects.
The court had reserved its verdict on April 30 after hearing arguments from all parties. The government had introduced the tax to increase revenue collection, but the court held that it exceeded constitutional limits and encroached upon legal boundaries, leading to its annulment.