ISLAMABAD: The Federal Board of Revenue (FBR) has been approached to refund taxes collected under section 7E (deemed income tax on immovable property) and Super Tax under section 4C (tax on high earners), seeking a clear, policy-level mechanism for taxpayers to reclaim amounts paid or recovered.
The refunds have been claimed under these two contested provisions of the Income Tax Ordinance, 2001, in the wake of judgments by the Federal Constitutional Court (FCC).
Waheed Shahzad Butt, an Advocate of the Supreme Court of Pakistan, has written to FBR Chairman Rashid Mahmood Langrial, routed through the Member (Policy-IR), Member (IR-Operations) and Member (IR-Legal), arguing that taxpayers are now in an “untenable legal and financial position” because the taxes have been collected but no refund procedure has been notified.
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On Section 7E, the so-called “deemed income” tax on immovable property, the FCC struck down the provision, declaring it unconstitutional and void from the outset, and set aside all notices and proceedings initiated under it.
The provision, introduced through the Finance Act 2022, had applied to properties valued above Rs25 million and imposed a levy based on five per cent of FBR-assessed fair market value.
In case of Super Tax, the FCC upheld the constitutional validity of the super tax, while excluding certain exempt capital gains from its scope. The court reasoned that the super tax is an additional tax on income, deriving legislative authority from Entry 47, Part I of the Federal Legislative List of the Constitution.
The decisive corollary, as summarised by legal commentators, is that super tax cannot be levied on the sale of immovable property, where the asset was held beyond a prescribed period, was inherited, or is otherwise exempt.
The clarification request asks the Member (Policy-IR) to issue clear, policy-level guidance specifying the procedure through which taxpayers may claim refunds of income tax recovered under Section 7E and Super Tax, direct field formations to ensure uniform treatment of such refund claims across all tax jurisdictions and communicate any prescribed form, application format, or designated forum for filing them.
Waheed Butt emphasised that the matter involves binding constitutional court pronouncements and that the continued withholding of these amounts without a clear refund route warrants expeditious, priority guidance.
Super Tax charged on already-exempt income would be refundable under the ruling while Section 7E refund universe is potentially much wider, since that levy was struck down in its entirety. As of the date of the request, the FBR had not notified a dedicated refund mechanism for either head, leaving affected taxpayers without a clear path to recover sums now declared unlawful or inapplicable, Waheed added.
Copyright Business Recorder, 2026
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