KARACHI: The Federal Board of Revenue (FBR) has planned to challenge the Sindh High Court’s order to stop collection of one-time super tax from the big corporate on an appeal filed by a local brokerage as the stay strangled the revenue body’s effort to meet its target, a senior official said on Monday.
“A leading brokerage house in Karachi approached the Sindh High Court (SHC) challenging the levy for it being unconstitutional and discriminatory in nature,” an official informed The News.
In November 2015, the SHC stayed the recovery of the super tax imposed for the tax year 2015 for the rehabilitation of temporary displaced persons on companies having an annual income of Rs500 million or above. The tax rate is four percent on income of banking companies and three percent on other taxpayers.
The revenue body had estimated a collection of Rs22 billion from the levy. The cost of rehabilitation of displaced persons and security enhancement was estimated at more than Rs180 billion.
The official said since the court had stayed the proceedings, the Inland Revenue authorities of the FBR were largely unable to recover the amount according to the estimates.
The official said the stay granted by the high court would not automatically expire after six months as the court ruled that the tax authorities would have to get it vacated through a counter petition.
Sources said once the stay was vacated, the FBR would recover the amount of the super tax as well as surcharge. The deadline for filing the corporate returns for the tax year 2015 already expired on January 21.
The government is already in the Supreme Court defending the levy as legitimate and constitutional against Younus Textiles Mills, Faysal Bank and IGI Insurance Company, which challenged the super tax.
The sources said the FBR collected a nominal amount under this head, but most of the eligible taxpayers are reluctant to pay the levy because of the stay granted by the high court.
There are scores of companies/taxpayers, having annual income of Rs500 million or above, and unless the court decides the matter, authorities could not proceed with the recovery. An official said billions of rupees were stuck due to the litigation.