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E-filing system to be modified: FBR to accept tax returns sans ISL payment

The Federal Board of Revenue has to make necessary modifications in the software of the e-portal system to accept income tax returns without submission of 0.5 percent Income Support Levy (ISL) in the light of recent order of the Sindh High Court (SHC).

Explaining the judgement of the SHC, tax experts told Business Recorder on Saturday that necessary modification in the software be made or manual filing of return shall be allowed. The Sindh High Court (SHC) had granted stay order against the imposition of the 0.5 percent Income Support Levy imposed through Finance Act, 2013. In the light of the order of the SHC, the FBR has to modify its electronic e-filing system to accept the return without payment of ISL.

Experts while interpreting the decision were of the view that the order of the SHC would allow all taxpayers intending to file the tax returns to file the same without ISL return & levy. This means that all the returns for the Tax Year 2013 are to be accepted without payment of the 0.5 percent ISL, they interpreted. According to the order, the court further observed that in case, under E-Portal system, return is not accepted on account of non-filing of computation and payment form in terms of the Act and the Rules and non-payment of income support levy, either necessary modification in the software be made instantly or the petitioner may be allowed to file his return of income manually, to avoid any delay in this regard.

The petitioner has challenged the vires of the Income Support Levy charged through the Income Support Levy Act, 2013, for being illegal and without lawful authority. It has been argued that the subject levy is beyond the competence of the Federal Legislature after 18th Amendment, whereby the concurrent list has been deleted. The purpose has been defined in the preamble of the Act itself according to which income support levy has been imposed to provide financial resources and to promote social protection and other social and economic wellbeing of distressed persons and families, which according to counsel, fail within the domain and legislative competence of the Provincial Legislature. It has been further contended that the levy is also discriminatory as it intends to doubly tax the existing tax payers who are at ready 'paying tax and file their yearly return of income along with wealth statement, whereas the persons who might have accumulated huge wealth and moveable assets, but not filing their tax returns are not made liable to pay any income support levy under the impugned enactment as no mechanism is provided under the impugned enactment for such purpose.

The petitioner further stated that this levy amounts to double taxation, as acquiring of assets or any increase thereon is primarily on the basis of income earned by a taxpayer during a particular year upon which tax is already paid, whereas, the moveable assets is the accumulation of the savings of the taxpayer for that year. The subject levy has been imposed only to extract money from the existing taxpayers by further burdening them to achieve the financial targets, whereas there is no rationale behind such levy.

Copyright Business Recorder, 2013


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