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Thursday February 02, 2023

For people without taxable income: LHC declares collection of advance tax unconstitutional

The LHC has declared unconstitutional the collection of advance tax from people who do not have taxable income

November 16, 2022
The LHC building. The News/File
The LHC building. The News/File

LAHORE: The Lahore High Court has declared unconstitutional the collection of advance tax from people who do not have taxable income. It ordered that the collection of income tax is not allowed without estimating the income.

The Lahore High Court Justice Shahid Jameel issued the decision on 22 petitions of low-income mobile phone users and levying Rs20,000 advance tax on wedding hall bookings. The petitioners had challenged the levy of advance tax by amending Section 236D of the Income Tax Ordinance. The court clubbed all 22 petitions and sent them to chairman FBR for consultation with the attorney general. The court declared that an unreasonable tax is unconstitutional if it destroys businesses or deprives people of their property, ordering an amendment to the Income Tax Ordinance 2001. The court declared that following the judicial restraint, they are sending it to the FBR and attorney general for modification, all necessary steps should be taken within 90 days and the implementation report should be submitted to the court. The court stated that the interim relief given to the petitioners will continue till the FBR concludes the matter.

The judgment said that people without income are entitled to take the basic necessities of life from the state, unfortunately, the citizens without income already pay indirect taxes. The unconsolidated advance tax on such persons may be forfeited. The judgment further stated that tax is not an expropriation, which takes away the property of citizens or destroys the business of taxpayer and it should not be against the fundamental rights given in the Constitution. According to the judgment, collection of income tax is not allowed without estimating the income.

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