In a major relief for Pakistan’s real estate sector, the Federal Constitutional Court has struck down Section 7E of the Income Tax Ordinance, declaring the provision unconstitutional.

The court also dismissed appeals filed by the Federal Board of Revenue (FBR) seeking restoration of Section 7E, while declaring all actions taken by the tax authority under the provision null and void.

Section 7E had imposed a deemed income tax on immovable properties, including plots that were not in active use or generating income. The provision had faced strong criticism from property owners and developers since its introduction.

Earlier, the Peshawar, Balochistan, and Islamabad High Courts had declared Section 7E invalid, while the Lahore and Islamabad High Courts had ruled the provision to be constitutional. Citizens later challenged those decisions before the Constitutional Court.

The Constitutional Court accepted the appeals filed against the Lahore and Islamabad High Court rulings and decided the case in favor of the petitioners.

The verdict in the Section 7E case had been reserved on April 30 after completion of arguments from all parties.