Important update: Section 7E (deemed rental income tax on property) was repealed under the Finance Act 2026-27. If you’re reading older guidance — including our own previous version of this post — that treats 7E as an active, ongoing obligation, that information is now outdated. This page explains what Section 7E was, why it was repealed, and what it means if you have prior-year 7E matters still outstanding.
What Section 7E Was
Introduced through the Finance Act 2022, Section 7E imposed tax on deemed rental income from immovable property owned by resident persons in Pakistan — meaning the tax applied whether or not the property was actually generating rent. It was one of the more disputed provisions in recent tax history, with several court challenges questioning its constitutional basis (taxing notional rather than actual income).
Why It Was Repealed
The Federal Board of Revenue confirms the Finance Act 2026-27 formally omitted Section 7E, alongside the repeal of CVT (Capital Value Tax) on foreign assets. This was part of a broader simplification of property-related taxes in the same Finance Act that also flattened the 236C/236K withholding rates on property transactions — see our updated Property Purchase and Sale Tax Rates guide for those current numbers.
What This Means If You Have Prior-Year 7E Matters
Repeal going forward doesn’t automatically erase obligations or disputes for tax years when 7E was in force. If you have any of the following, they still need to be handled under the old rules, not ignored:
- Unpaid 7E liability from a prior tax year — repeal doesn’t retroactively cancel a debt that was already due.
- An ongoing 7E dispute or appeal — these proceed under the law as it stood for that tax year; check with whoever is handling your case rather than assuming it’s automatically dropped.
- A property you self-assessed for 7E in a past return — no action needed retroactively, but don’t include a 7E computation on returns for the current tax year onward.
If you’re not sure whether an old 7E notice or liability is still active, it’s worth having someone check your specific IRIS record rather than guessing based on the repeal alone. Get in touch via our contact page if you’d like that reviewed.
FAQs
Do I still need to declare deemed rental income on my current return?
No — since Section 7E is repealed under the Finance Act 2026-27, there’s no deemed-rental-income computation to make going forward.
I already paid 7E for a previous tax year — can I get a refund?
Repeal is prospective, not retroactive — it removes the obligation going forward, it doesn’t automatically refund tax correctly assessed and paid under the law as it stood at the time.
Is CVT (Capital Value Tax) on foreign assets also gone?
Yes — CVT on foreign assets was repealed in the same Finance Act 2026-27, alongside Section 7E.
