ITO Section 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.

(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 PartI 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 and regulating housing and ancillary facilities in a specified or notified area.]