The Sindh High Court (SHC) has issued a stayorder against Section 7E (tax on deemed income basis) of the Income Tax Ordinance, 2001 for TY2023 subject to 50% payment, it was learnt on Monday.

Under Finance Act, 2022 section 7E was introduced whereby, for tax year 2022 and onwards, every resident person has been treated to have derived as income, an amount equal to five per cent of the fair market value of the capital asset situated in Pakistan subject to exclusions of the capital assets provided in the law.

“… Per learned counsel, tomorrow being the last day for filing tax returns, and in the given circumstances where the Honourable Supreme Court has provided a relief of like nature for the petitioners/taxpayers for the last year subject to the payment of 50% of the liability, similar relief be extended to the petitioner for the current tax year also,” read the order sheet of C.P No. D-5127 of 2023.

“… Subject to the payment of 50% liability under Section 7E of the Income Tax Ordinance, 2001 no coercive action be taken against the petitioner under Section 7E for the period from 01.07.2022 to 30.06.2023.

“In these terms, the instant petition stands disposed of.”

In August, the Federal Board of Revenue (FBR) implemented the judgment of the Lahore High Court (LHC) on Section 7E. After the implementation, Section 7E would not apply to cases (filers/non-filers) falling within the jurisdiction of the LHC.

However, the SHC issued a stay order, with the interim order calling for 50% of the payment to be made by October 31.

But the FBR portal, which calculates the liability, has yet to be adjusted to accept the 50% payment, and is only allowing for a full settlement.