A fresh practical issue has emerged following the constitutional ruling against Section 7E of the Income Tax Ordinance, 2001. Although the provision relating to deemed income from immovable property has reportedly been struck down as unconstitutional and void from inception, the FBR has yet to prescribe a formal mechanism through which taxpayers can claim refund of amounts already paid or recovered under the provision.
The issue is different, but equally relevant, for Super Tax under Section 4C. While the levy itself has been upheld, the constitutional ruling has reportedly excluded certain exempt capital gains from its scope. This may create refund implications in cases where Super Tax was collected on income that was otherwise exempt, including qualifying gains on immovable property.
The key issue now is implementation. Tax representatives have called upon the FBR to introduce a uniform refund or adjustment mechanism, including the possibility of allowing eligible amounts to be adjusted against Tax Year 2026 liabilities. Until a formal procedure is announced, taxpayers with historical Section 7E payments or Super Tax paid on exempt income should carefully review their tax records and preserve evidence of the amounts paid or recovered.