Recovery of CVT: IHC restrains FBR from taking action against residential plot owners

ISLAMABAD: Islamabad High Court (IHC) has restrained Federal Board of Revenue (FBR) from taking any coercive action against owners of residential houses within the territorial limits of the Islamabad Capital Territory for recovery of Capital Value Tax (CVT).

Responding to the recovery notices of the FBR, citizens have approached the IHC against the said CVT.

According to an order of the IHC, the court has issued notices to the federation including Attorney General of Pakistan and Federal Board of Revenue (FBR) to submit comments. In the meanwhile, no coercive measures shall be adopted against the petitioners with respect to the tax levied.

Through the instant writ petition, the petitioners impugn Section 8 (1), 8 (2) clauses (ab) and (ac), Section 8(4) of the Finance Act, 2022 as inserted therein through Section 12 of the Finance Act, 2024 on the touchstone of Articles 23, 24 and 25 as well as Entry No.50 of Part-I of the Federal Legislative List contained in the Fourth Schedule of the Constitution.

This petition is to be heard with petition (2641 of 2024), IHC maintained.

For the sake of consistency, let notices be issued to the respondents in the instant petition, as well. Notice to the learned Attorney-General for Pakistan shall also be issued, IHC order added.

In other cases, the petitioners seek to challenge the legality and constitutionality of Section 12 of the Finance Act, 2024, whereby certain amendments have been made to Section 8 of the Finance Act, 2022, as well as, the Table contained in the First Schedule to the Finance Act, 2022.

Through the Impugned Amendment, a so-called Capital Value Tax (‘CVT’) has been imposed on farmhouses (measuring at least 2000 square yards) and residential houses (measuring at least 1000 square yards) (“Impugned Levy”).

The Impugned Levy is to be charged on the basis of the area of the farmhouse or residential house, with different rates having been prescribed depending on the size of the farmhouse or residential house.

Copyright Business Recorder, 2025