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(b) the authorities granting approval for computation and payment

plan of tax; and
(c) responsibilities and powers of the authorities approving,
suspending and cancelling no objection certificate to sell and the
matters connected and ancillary thereto.
1[(4)This section shall apply to projects undertaken for development and
sale of residential and commercial plots initiated and approved.─
(a) during tax year 2017 only;
(b) for which payment under rule 13S of the Income Tax Rules, 2002 has
been made by the developer during tax year 2017; and
(c) the Chief Commissioner has issued online schedule of advance tax
installments to be paid by the developer in accordance with rule 13ZB
of the Income Tax Rules, 2002.”;

2[7E.Tax on deemed income.- (1) For tax year 2022 and onwards, a tax shall
be imposed at the rates specified in Division VIIIC of Part-I of the First Schedule
on the income specified in this section.

(2) A resident person shall be treated to have derived, as income

chargeable to tax under this section, an amount equal to five percent of the fair
market value of capital assets situated in Pakistan held on the last day of tax year
excluding the following, namely:–

(a) one capital asset owned by the resident person;

(b) self-owned business premises from where the business is

carried out by the persons appearing on the active taxpayers’
list at any time during the year;

(c) self-owned agriculture land where agriculture activity is carried

out by person excluding farmhouse and land annexed thereto;

(d) capital asset allotted to –

(i) a Shaheed or dependents of a shaheed belonging to

Pakistan Armed Forces;

1
Section 4 substituted by the Finance Act, 2017. The substituted section read as follows:
“This section shall apply to projects undertaken for development and sale of residential,
commercial or other plots initiated and approved after the 1st July, 2016.”
2
Section 7E inserted by the Finance Act, 2022.

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(ii) a person or dependents of the person who dies while in the

service of Pakistan armed forces or Federal or provincial
government;

(iii) a war wounded person while in service of Pakistan armed

forces or Federal or provincial government; and

(iv) an ex-serviceman and serving personal of armed forces or

ex-employees or serving personnel of Federal and
provincial governments, being original allottees of the
capital asset duly certified by the allotment authority;

(e) any property from which income is chargeable to tax under the
Ordinance and tax leviable is paid thereon;

(f) capital asset in the first tax year of acquisition where tax under
section 236K has been paid;

(g) where the fair market value of the capital assets in aggregate
excluding the capital assets mentioned in clauses (a), (b), (c),
(d), (e) and (f) does not exceed Rupees twenty-five million;

(h) capital assets owned by a provincial government or a local

government; or

(i) capital assets owned by a local authority, a development

authority, builders and developers for land development and
construction, subject to the condition that such persons are
registered with Directorate General of Designated Non-
Financial Businesses and Professions 1[:

Provided that the exclusions mentioned at clauses (a), (e), (f)

and (g) of this sub-section shall not apply in case of a person not
appearing in the active taxpayers’ list, other than persons covered in
rule 2 of the Tenth Schedule.]

(3) The Federal Government may include or exclude any person or

property for the purpose of this section.

(4) In this section–

(a) “capital asset” means property of any kind held by a person,

whether or not connected with a business, but does not include
–

1
The full stop substituted with colon and new proviso added by the Finance Act, 2023.

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(i) any stock-in-trade, consumable stores or raw materials

held for the purpose of business;
(ii) any shares, stocks or securities;
(iii) any property with respect to which the person is entitled
to a depreciation deduction under section 22 or
amortization deduction under section 24; or
(iv) any movable asset not mentioned in clauses (i), (ii) or (iii);

(b) “farmhouse” means a house constructed on a total minimum

area of 2000 square yards with a minimum covered area of 5000
square feet used as a single dwelling unit with or without an
annex:

Provided that where there are more than one dwelling

units in a compound and the average area of the compound is
more than 2000 square yards for a dwelling unit, each one of
such dwelling units shall be treated as a separate farmhouse.
1
[7F. Tax on builders and developers. – (1) A tax shall be imposed at the rate
specified in Division I or II of Part-I of the First Schedule on the taxable profit of
every person deriving income from the business of –

(a) construction and sale of residential, commercial or other buildings;

(b) development and sale of residential commercial or other plots; or

(c) activities as mentioned in (a) and (b) above.

(2) For the purpose of this section, taxable profit shall be –

(a) ten percent of gross receipts in respect of activities specified in clause

(a) of sub-section (1);

(b) fifteen percent of gross receipts in respect of activities specified in

clause (b) of sub-section (1); and

(c) twelve percent of gross receipts in respect of activities specified in

clause (c) of sub-section (1).

Explanation.- For the removal of doubt, it is clarified that the provisions of

this section shall only apply in respect of income accruing from gross receipts from
activities specified in sub-section (1) and shall not be applicable to income or
incomes from any other source or under any head of income.

1
Section 7F inserted by the Finance Act, 2024.

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(3) Where a taxpayer, while explaining the nature and source of the
amount credited or the investment made, money or valuable article owned or the
funds from which the expenditure was made, takes into account any source of
income which is subject to tax under this section, the taxpayer shall not be allowed
to take credit of any sum as is in excess of taxable profit:

Provided that where taxable income under section 9 is more than the taxable
profit under this section, taxpayer shall be entitled to take credit of such taxable
income subject to the payment of tax at the rate specified in Division I or II of Part-
I of First Schedule.

(4) The provisions of this section shall not apply to a builder or developer
established by an Act of the Parliament or a Provincial Assembly or by a
Presidential Order and who is engaged in activities for the benefit of its employees
or otherwise including activities for the planning and development of and for
providing 97 and regulating housing and ancillary facilities in a specified or notified
area.]

8. General provisions relating to taxes imposed under sections 1[ 2[5, 5A,

5AA, 6, 7, 7A, 7B and 7E].– (1)-Subject to this Ordinance, the tax imposed under
Sections 3[5, 5A, 5AA, 6, 7, 7A, 7B and 7E] shall be a final tax on the amount in
respect of which the tax is imposed and—

(a) such amount shall not be chargeable to tax under any head of
income in computing the taxable income of the person who
derives it for any tax year;

(b) no deduction shall be allowable under this Ordinance for any

expenditure incurred in deriving the amount;

(c) the amount shall not be reduced by —

(i) any deductible allowance; or

(ii) the set off of any loss;

(d) the tax payable by a person under 4[section] 5, 5[5A,6[“, 5AA”] 6,

7, 7[7A, 7B and 7E] shall not be reduced by any tax credits
allowed under this Ordinance; and

1
The expression “5, 6 and 7” substituted by the Finance Act, 2021.
2
The expression “5, 5AA, 6, 7, 7A and 7B” substituted by the Finance Act, 2022.
3
The expression ”5, 3[ ] 3[ ] 3[“, 5AA”] 6, 7, 7A 3[and 7B]”” substituted by the Finance Act, 2022.
4
The word “sections” substituted by the word “section”by the Finance Act, 2014.
5
The word and figure “6 or 7” substituted by the Finance Act, 2015.
6
Inserted by the Presidential Order No.F.2(1)/2016-Pub dated 31.08.2016.
7
The expression “7A and 7B” substituted by the Finance Act, 2022.

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