Tax on presumed rental income is contested in the LHC

Lahore: The former chairman of District Council Narowal has challenged in the Lahore High Court (LHC) the law that says people have to pay income tax on “deemed rental income” from properties. This was reported in the national dailies on November 16.

Based on the details, the new law said that the Federal Board of Revenue (FBR) had to treat every property whose owners did not use it as if it was rented out for 5% of its total market value. This means that every property owner will have to pay a tax to the federal government that is equal to 1% of the property’s market value.

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The news source said that the petitioner thought that the tax imposed under the newly added section 7E of the Income Tax Ordinance, 2001 had been charged as an income tax when it was clearly not an income tax. He then said that property tax is the only major way for local governments to get money. He asked the LHC to say that it was illegal and against the Constitution.