Pakistan’s real estate industry received a major boost after the Federal Constitutional Court ruled that the law imposing tax on under-construction properties was unconstitutional. With this decision, the real estate tax abolished ruling is expected to benefit builders, investors and the wider construction sector.
The court, headed by Chief Justice Aminuddin Khan, announced a short verdict while hearing appeals related to Section 7E of the Income Tax Ordinance. The court rejected all petitions filed by the federal government seeking restoration of the law.
Following the ruling, all actions and tax collections carried out by the Federal Board of Revenue under Section 7E have also become legally ineffective.
The now-cancelled law imposed taxes on under-construction buildings and certain properties. The move had faced strong opposition from people linked to the real estate and construction sectors, who argued that it discouraged investment and slowed development activity.
The real estate tax abolished decision came after several high courts gave conflicting judgments on the matter. The Peshawar High Court, Balochistan High Court and Islamabad High Court had earlier declared the law illegal, while the Lahore High Court upheld it as constitutional.
Due to these contradictory rulings, the matter reached the Federal Constitutional Court, which reserved its verdict on April 30 after hearing arguments from all parties involved.
Legal experts believe the real estate tax abolished verdict will directly support Pakistan’s property market and encourage fresh investment in construction projects. They say the decision may also improve business confidence in the real estate sector at a time when the industry has been facing economic pressure.
Analysts expect the ruling to provide relief to developers and property owners who were struggling with additional tax burdens on incomplete projects. Many in the construction industry have welcomed the decision and called it a positive step for economic activity.
The ruling is also likely to increase investor interest in housing and commercial development projects across the country.