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Karachi, August 23, 2023 (PPI-OT): Mr. Muhammad Suleman Chawla, Acting President FPCCI, has apprised that the entire business, industry and trade community of Pakistan is of the view that the Section 7E introduced in Income Tax Ordinance (ITO) 2001 has categorically proven to be not only chaotic for the economic activities; but also futile and ineffective as it has only generated PKR. 10 billion in the first year of its implementation. We have lost much more in investor sentiment of the domestic and overseas Pakistanis alike as far as real estate sector is concerned, he added.
Mr. Chawla pointed out that after Lahore High Court (LHC) judgement, FBR has issued Circular No. 3 of 2023 – 24 dated August 15, 2023, stating that Section 7E will not apply on cases falling under the jurisdiction of LHC, i.e. Punjab. Mr. Suleman Chawla proposed that now is an opportune time to listen to the longstanding concern of the business community over 7E; and, called upon Ms. Shamshad Akhtar, caretaker federal minister for finance and revenue, to instruct FBR to withdraw Section 7E for the rest of the country and earn goodwill of the business community.
Abolishment of Section 7E in ITO 2001 would prove to be a tangible confidence building measure for the stakeholders of country’s economy and will impart a sense of being heard by their government, he added. Mr. Suleman Chawla also highlighted that upward revised rates of withholding tax (WHT) on buying and selling of immovable properties have been implemented, i.e. from 1 percent WHT to 3 percent WHT under Sections 236C (Advance Tax on sale or transfer of immovable Property) and 236K (Advance Tax on purchase or transfer of immovable property) respectively. This is unfair and counterproductive – and, should be withdrawn with immediate effect before it inflicts anymore damage.
Mr. Suleman Chawla, Acting President FPCCI, questioned the rationale and efficacy of repeatedly issuing thousands of income tax notices to the filers over 7E; who were subjected to harassment and experienced psychological pressures due to those unfair, arm-twisting, ill-prepared and copy-paste notices. Income tax filers and law-abiding citizens need to be facilitated, rewarded and acknowledged – like elsewhere in the world – rather than further squeezed to meet revenue collection targets, Mr. Chawla added.
Acting FPCCI Chief maintained that FBR’s Income Tax Department seems to be uninformed of the ground realities as introduction of new provision in the Income Tax Ordinance 2001 in the form of Section 7E which tantamount to squeezing the existing taxpayers even further; instead of exploring new avenues and broadening the tax-base. Mr. Suleman Chawla strongly demanded that all existing show cause notices under Section 7E should be withdrawn with immediate effect; wherein a recovery vis-a-vis deemed income of an amount equal to 5% of the fair market value has been demanded for the capital assets and immovable properties held by the concerned persons.
Mr. Chawla further explained that 7E is a levy of income tax on immovable properties – which under the constitution is a provincial subject and is also tantamount to double taxation. Real Estate and construction sector would suffer directly due to 7E; and, will result in unemployment and decline in commercial and economic activities as more than 70 allied sectors and industries of the construction industry will suffer.
For more information, contact:
Head Office,
Federation of Pakistan Chambers of Commerce and Industry (FPCCI)
Federation House, Main Clifton, Karachi, Pakistan
Tel: +92-21-35873691-94
Fax: +92-21-35874332
Email: info@fpcci.org.pk
Website: http://fpcci.org.pk/
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