FBR's Retrospective Penalty on Late Filers Deemed Unconstitutional
The Federal Board of Revenue (FBR) is facing criticism over its enforcement of a new penalty on “Late Filers,” introduced through the Finance Act 2024. Tax experts argue that applying this penalty retrospectively is unconstitutional and thus invalid.
Several taxpayers have challenged the FBR’s move in the Lahore High Court (LHC). They argue that, despite being listed as active taxpayers, they are being forced to pay an advance tax at an enhanced rate of 6 percent under Section 236K of the Income Tax Ordinance, 2001. This is despite the legal requirement being only 3 percent, as outlined in Division-XVIII of Part-IV of the First Schedule, for transactions involving immovable property.
The taxpayers contend that this increase in the tax rate lacks legal basis and is contrary to existing law. The LHC has responded by issuing notices to the tax department, requesting a formal reply to these claims.
