What is 7E Tax in Pakistan? Deemed Rental Income Explained (FBR Guide)

 

🏠 What is 7E (Section 7E) Property Tax?

Section 7E was introduced by Federal Board of Revenue to tax idle / non-rented properties.

👉 Government assumes your property is generating income even if it is vacant.

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💰 How 7E Tax Works

$\text{Deemed Income} = 5\% \times \text{Fair Market Value}$

• The law assumes 5% annual rental value
• Then this is taxed like normal income (approx up to 15% for filer)

👉 Simple Example:

• Property value = 1 Crore
• Deemed income = 5 lakh/year
• Tax ≈ 75,000 (approx, depends on slab)

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📍 Where It Applies

• Karachi
• Lahore
• Islamabad
• All Pakistan

👉 It applies nationwide, including Karachi.

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⚠️ When 7E Applies

You will pay 7E tax if:

✔ Property is open plot or unused
✔ Property is not rented
✔ Property value is above approx 25 million (2.5 Crore)
✔ You are a filer

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❌ Exemptions (Very Important)

You DON’T pay 7E tax if:

• You live in the house (self-occupied)
• Property is rented
• Agricultural land
• Property used in business
• One personal house is exempt

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📄 Why People Call it “7E Form”

• When filing tax return on IRIS Portal
• You must declare property under Section 7E
• That declaration is informally called “7E form”

👉 So technically:
It’s not a separate form — it’s part of your income tax return.

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