People without taxable income: LHC declares collection of advance income tax ‘unlawful’

LAHORE: The Lahore High Court observed that collection of an unadjustable advance income tax from a person not liable to pay income tax or file an income tax return is unconstitutional. The court passed the directions on a petition of a widow challenging tax under Section 236 of the Ordinance of 2001, against cellular phone services. Unfortunately, the citizens, already being subjected to indirect taxes, are now taxed through unadjustable advance income tax which can only be termed as expropriatory and confiscatory, the court observed.

The income tax is meant to be charged on income proportionality but cannot allow to be charged in the absence or without determining the income. The court also held that the act of Parliament, levying a tax, should not offend any of the fundamental rights guaranteed by the Constitution.

‘FBR: dismal income tax collection

The court said putting an extra burden of compliance which is not in normal course of business and that too without remuneration or concession in tax liability, needs to be revisited by the government as well as tax administrators.

The court, therefore, referred the matter to FBR for suitable amendments within 90-days. The court also converted the connected petitions into representations and sent to the Chairman FBR, who shall forthwith consult, the Attorney General of Pakistan on the concerns and legal position. The court said needful be done within 90-days and a compliance report shall be submitted to the Deputy Registrar (Judicial).

Copyright Business Recorder, 2022