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KARACHI: In a significant development, the Federal Board of Revenue (FBR) has decided to engage legal counsel to defend its position in a crucial case related to tax on windfall income.

The case, currently pending before the Islamabad High Court (IHC), involves constitutional provisions and intricacies of delegated legislation. The controversy centres around SRO 1588(1)/ 2023, which is currently suspended by the IHC, in its order dated November 29, 2023 till the next hearing.

According to the details, this SRO 1588 (1)/ 2023 has imposed an additional tax of 40% on windfall income earned by banks. However, the writ petition no. 3926 of 2023, filed in the IHC, challenges the vires (legality) of this SRO. The petition raises intricate legal questions, including the interpretation of constitutional provisions and canons of statutory construction. The petitioners contend that the SRO lacks clarity regarding the consequences.

Forex deals: Tax on windfall profits of banks likely

Sources said that the FBR’s Inland Revenue Policy wing has found itself ill-equipped to address the complex legal issues raised by the case, lacking the expertise to delve into constitutional nuances and intricacies of the delegated legislation.

In light of these challenges, the FBR has formally requested that a seasoned and competent Legal Counsel be granted power of attorney to represent the board’s interests. The appointed counsel will defend the FBR’s position and meticulously frame and submit point-by-point comments in the IHC.

Earlier, the IHC, in its order dated November 29, 2023, suspended the operation of SRO 1588(1)/ 2023. The court has issued notices to the FBR and the Attorney General of Pakistan to submit their comments by next hearing on December 8, 2023 but the hearing was cancelled by order and no new date has been scheduled so far.

Copyright Business Recorder, 2024

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Muhammad Kashif Feb 22, 2024 11:08am
The case should be decided as quick as possible. The banking sector of Pakistan has been taking illegal advantages of windfall profits by manipulating the dollar prices in the last year.
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