Commerce Desk
KARACHI : Mian Zahid Hussain, President Pakistan Businessmen and Intellectuals Forum & All Karachi Industrial Alliance, Chairman National Business Group Pakistan, Chairman Policy Advisory Board FPCCI, and Former Provincial Minister Information Technology, has expressed profound satisfaction with the Federal Constitutional Court’s landmark judgement delivered on May 07, 2026, regarding declaring Section 7E of the Income Tax Ordinance ultravires to the constitution. This long-awaited verdict addresses the business community’s persistent concerns over the tax on “deemed income” from immovable properties, which has significantly hampered economic activity.
Mian Zahid Hussain stated that the business community has consistently maintained that Section 7E violates fundamental principles of income tax by taxing hypothetical earnings rather than actual income. The imposition of this tax has led to a massive stagnation in the real estate sector, which serves as a critical engine for the economy. With Pakistan currently facing a staggering housing shortage of approximately 12 million units—a deficit that grows by 450,000 units every year—the discouragement of investment in property has been counterproductive to national development goals.
The veteran business leader highlighted that the real estate sector’s slump has directly impacted over 40 to 70 allied and supply chain industries, including cement, steel, and transport. He noted that the cement sector, despite having limestone reserves sufficient to supply the world, and the steel sector, which holds a potential for USD 1 billion in import substitution through ship-breaking, have both felt the secondary effects of this tax. Mian Zahid Hussain emphasized that the revenue generated from such coercive measures is negligible compared to the economic cost of stifling the real estate sector, which is vital for employment and GDP growth.
Mian Zahid Hussain further urged the government to use this judicial clarity to completely abolish Section 7E and Section 7F in the upcoming federal budget. He pointed out that while the tax-to-GDP ratio remains at a low 10.6%, revenue should be driven by economic growth rather than penalizing capital. He argued that instead of relying on deemed income taxes, the Federal Board of Revenue should focus on broadening the tax base through digitalization and bringing the retail sector, which has a potential of billions of rupees, into the tax net.
The Chairman of the Policy Advisory Board of FPCCI concluded by stating that the removal of Section 7E would restore investor confidence and trigger a revival in the construction industry. He called for a shift toward a business-friendly environment where tax is charged on actual income, ensuring that the liquidity of the formal sector is preserved for reinvestment and modernization.
