The FBR has issued instructions dated September 23, 2026, directing its field formations not to reject applications seeking revision of income tax returns concerning Section 7E of the Income Tax Ordinance, 2001. The instructions follow the Federal Constitutional Court’s judgment dated May 7, 2026, which declared Section 7E unconstitutional and void from its inception.
Section 7E, introduced through the Finance Act, 2022, imposed tax on deemed income from certain immovable properties. Following the Court’s judgment, taxpayers who previously paid tax under this provision can seek revision of their relevant returns. Where the revised return results in a refund becoming due, the FBR has instructed its field formations to process the subsequent refund application expeditiously in accordance with the applicable law and procedure.
Importantly, the FBR’s directive does not provide for automatic refunds. Taxpayers must follow the applicable revision and refund procedures. The instructions are also expressly restricted to Section 7E and do not extend to unrelated revisions or outstanding refund claims under other provisions, including Section 4C relating to Super Tax.