Section 7E Deemed Income Tax on Property: Exemption Criteria & Legal Rights
Section 7E levies a 5% deemed rental income tax on immovable properties. Learn which properties qualify for exemption and how to obtain FBR Form A certificates.
- One self-owned residential house is strictly exempt from Section 7E deemed tax.
- Properties with fair market value under Rs. 2.5 Crore total aggregate receive exemption.
- Commercial plots under active construction receive specific statutory exemptions.
Under Section 7E of the Income Tax Ordinance, every resident individual owning immovable property exceeding Rs. 2.5 Crore aggregate value is deemed to earn rent equal to 5% of the property value, taxed at 20% (effective 1% tax on total market value).
Exemptions apply to: 1) One residential house owned and occupied by the taxpayer, 2) Agricultural land, 3) Property owned by local authorities or provincial governments.
To transfer or sell property, FBR now requires a Section 7E Exemption Certificate (Form A) issued by the Commissioner Inland Revenue.
Our firm files constitutional writs in High Court to challenge illegal Section 7E demands and assists clients in securing official exemption clearance.
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