ISLAMABAD: The Federal Board of Revenue (FBR) has prescribed the relevant form for taxpayers with regard to payment of tax on immovable properties under Section 7E – the tax on deemed income basis under the Income Tax Ordinance, 2001,

The FBR has issued SRO.1829(I)/2021 here on Tuesday to issue a new form through proposed amendments to Income Tax Rules 2002.

A tax expert said that the issuance of the form means that the taxpayers would have to pay the tax on deemed income basis on immovable properties under the current income tax return form for Tax Year 2022.

According to the draft form, the FBR has asked the taxpayers to specify the total value of the capital assets taxable under section 7E; deemed income under section 7E and tax on deemed income under section 7E. The form has also prescribed separate columns for the cost/declared value and fair market value of the immovable property.

This notification, containing the form, would be applicable for the tax year 2022, FBR stated.

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The said form would be part of the income tax return for tax year 2022 to be filed by the extended period of October 31, 2022.

The FBR stated that a new section 7E was introduced through Finance Act, 2022 whereby for tax year 2022 and onwards, a resident person is treated to have derived income equal to five percent of fair market value of the capital assets situated in Pakistan which will be chargeable to tax at the rate of 20% under Division VIIIC of Part I of First Schedule of the Ordinance.

Following exclusions have been provided to which this section will not apply: One capital asset owned by the resident person; Self-owned business premises from where the business is carried out by the persons appearing on the active taxpayer’s list at any time during the year; Self-owned agriculture land where agriculture activity is carried out by the person but excluding farmhouse and annexed land.

Farmhouse has been defined in this section; Capital asset allotted to a Shaheed or dependents of a Shaheed belonging to Pakistan Armed Forces; a person or dependents of a person who dies while in the service of Pakistan armed forces or federal or provincial government; a war wounded person while in service of Pakistan armed forces or federal or provincial government; an ex-serviceman and serving personnel of armed forces or ex-employees or serving personnel of federal and provincial governments who are original allotees of the capital asset as duly certified by the allotment authority; any property from which income is chargeable to tax under the Ordinance and tax leviable has been paid; capital asset in the first year of acquisition on which tax under section 236K has been paid; Where fair market value of the capital assets in aggregate excluding capital assets mentioned above does not exceed rupees twenty-five million; capital assets which are owned by a provincial government or local government; capital assets owned by local authority, a development authority, builders and developers for land development and construction subject to the condition that such persons are registered with Directorate General of Designated Non-Financial Businesses and Professions.

Copyright Business Recorder, 2022