Business & Corporate · Section 7F · Tax Year 2026-2027
Builder & Developer Tax Calculator
Section 7F does not tax 10% of your receipts. It treats 10% of them as your profit — 15% for plots, 12% for both — and charges the ordinary slab or company rates on that. The difference is large, and this shows it.
Compare
All three activities on your receipts
| Activity | Deemed profit | Profit | Tax as individual / AOP | Tax as company |
|---|
Section 7F(2). The deemed profit replaces actual costs, so a thin-margin project can pay more than it would under ordinary accounting and a fat-margin one less.
Reference, not applied
The older fixed regime, Sections 7C and 7D
| Covered area | Karachi, Lahore, Islamabad | Hyderabad, Sukkur, Multan, Faisalabad, Rawalpindi, Gujranwala, Sahiwal, Peshawar, Mardan, Abbottabad, Quetta | Other urban areas |
|---|---|---|---|
| Commercial buildings, per sq ft | Rs 210 | Rs 210 | Rs 210 |
| Residential, up to 750 sq ft | Rs 20 | Rs 15 | Rs 10 |
| Residential, 751 to 1,500 sq ft | Rs 40 | Rs 35 | Rs 25 |
| Residential, 1,501 sq ft and more | Rs 70 | Rs 55 | Rs 35 |
| Commercial plots, per sq yd | Rs 210 | Rs 210 | Rs 210 |
| Residential plots, 201 sq yd and more | Rs 70 | Rs 55 | Rs 35 |
Divisions VIIIA and VIIIB of Part I of the First Schedule, still printed in the Finance Act 2026 material. This calculator does not apply them, because that regime attaches to particular projects rather than to the general charge. Confirm which applies to yours before relying on either figure.
Step by step
How Section 7F works
Start from gross receipts
Not profit, and not net of costs — the section replaces your cost base.
Take the deemed profit
10% for buildings, 15% for plots, 12% for both.
Apply the ordinary rates
Individual and AOP slabs with the 4AB surcharge, or the 29% company rate.
Read the effective figure
What matters commercially is the tax as a share of receipts, which is much lower than the headline percentage.
Reading the result
Deemed profit, then tax on that
The most common misreading is treating the percentage as the tax. It is not. The percentage establishes how much of your receipts the law treats as profit; the tax rate is then applied to that deemed profit.
So a receipt figure multiplied by the deemed-profit percentage gives an income, not a liability. Skipping the second step understates the tax by a wide margin.
Actual profit is irrelevant, in both directions
A project that ran over budget and made nothing is still taxed on deemed profit. A project that did far better than expected is taxed on the same deemed percentage. The regime trades accuracy for simplicity, and the trade is not always in your favour.
Individual or company changes the answer
The tax applied to the deemed profit depends on whether the person is an individual, an AOP or a company, because each is taxed under its own schedule. The same project through different vehicles produces different liabilities, which is worth modelling before the structure is fixed rather than after.
Where this stops
This works out the charge on receipts you enter. Whether a particular activity falls within the builder and developer regime, and how receipts are attributed between projects and years, are the parts that require judgement.
FAQs
Builder and developer tax FAQs
Is the tax 10% of my receipts?
No, and this is the mistake worth avoiding. Section 7F(2) makes 10% of gross receipts your deemed taxable profit for construction and sale of buildings; the tax is then charged on that profit at the ordinary rates. On Rs 100 million of receipts a builder is taxed on Rs 10 million of profit, which comes to about Rs 3.59 million for an individual — roughly 3.6% of receipts, not 10%.
What are the three deemed profit rates?
Ten per cent of gross receipts for construction and sale of residential, commercial or other buildings; fifteen per cent for development and sale of plots; and twelve per cent where you do both. The higher figure for plots reflects the thinner cost base in land development.
What rate is applied to the deemed profit?
The rates in Division I or Division II of Part I of the First Schedule — the normal individual and AOP slabs for an individual or AOP, including the 10% Section 4AB surcharge once taxable income passes Rs 10 million, and the company rate for a company. There is no special rate schedule for builders.
Does my other income get mixed in?
The Explanation to Section 7F says the section applies only to income accruing from these activities and not to income from any other source or head, so the deemed profit is ring-fenced rather than stacked on unrelated income. That is how this calculator treats it. If you have substantial other business income, confirm the interaction with your advisor before filing.
Is an individual or a company better off?
It depends entirely on scale. The company rate is a flat 29%, so a company pays 2.90% of receipts on buildings whatever the size of the project. An individual runs up the slabs, so a smaller builder pays less than a company and a larger one pays more once the surcharge bites. The calculator shows both figures side by side.
What about the old per-square-foot tax?
Sections 7C and 7D charged builders a fixed amount per square foot and developers a fixed amount per square yard, banded by city — Rs 210 per square foot for commercial buildings, and Rs 20, 40 or 70 per square foot for residential space in Karachi, Lahore and Islamabad, with lower figures elsewhere. Those tables are reproduced below for reference and are still printed in the Finance Act 2026 material, but they belong to a project-specific fixed regime rather than the general charge, so this calculator does not apply them. Confirm which regime your project falls under.
Does this replace advance tax on the property transfers?
No. Sections 236C and 236K still apply to the transfers themselves, and are collected by the registering authority from seller and buyer. Section 7F is the charge on your own profit from the business.
Related tools
Advance tax on the transfers is separate
Section 236C on the seller and 236K on the buyer still apply to each unit you transfer.
Open Section 236C Calculator