LHC rules FBR’s tax hike on late filers illegal

The Lahore High Court (LHC) has declared that the additional withholding tax rates on late income tax filers will not apply to transactions, returns, or assessments completed before the enactment of the 2024 Finance Act.

About a plea that the Defence Housing Authority filed on Tuesday, the LHC has made an order in this regard.

The writ petition, according to the LHC ruling, requests a declaration from this court that the changes made to section 100BA in conjunction with Rule 1-A of the Tenth Schedule, which were incorporated in the Income Tax Ordinance 2001 through Finance Act 2024, are prospective in character.

The petitioner is a statutory authority that works on real estate development projects. It is required under the Ordinance’s regulations to pay advance tax and transitional advance tax.

The petitioner has lodged a grievance regarding the retrospective application of the newly added provisions of the Ordinance.

This has led to the petitioner’s sale/purchase transactions under sections 236C and 236K resulting in higher income tax rates, as stated in the recently added Tenth Schedule.

Furthermore, it is claimed that the recently introduced clauses will have an impact on previously completed transactions, which is against the law.

After the writ petition was granted, it was declared that rule 1-A and its proviso did not apply retroactively and that the transactions, returns, and assessments that were finalized and completed before the Finance Act 2024 was enacted would not be impacted by these provisions, according to the LHC order.