FTO’s order: LHC issues notices to President, FBR


Lahore High Court (LHC) has issued notices to the FBR and the President, who has set aside an order of the FTO which has directed the FBR to take urgent steps to address the glaring anomalies in income tax slabs for salaried class under Finance Act, 2012.

Source told Business Recorder that Law and Justice Division has issued a ruling in this regard wherein the President of Pakistan has accepted the representation of the FBR under section 32 of the FTO Ordinance, 2000 in C No SUO MOTO (1)1100/2012 (Waheed Shahzad Butt Versus Secretary Revenue Division, Islamabad) said order passed by the President has now been challenged by the petitioner Waheed Shahzad Butt under Article 199 of the Constitution of Pakistan before the LHC.

Earlier on a suo motu intervention, the FTO has proceeded to direct the FBR to take urgent steps to address the glaring anomalies in income tax slabs (4,5 and 6) introduced under clause (1A) of First Schedule, Part I, Division I of Income Tax Ordinance, 2001, observing that tax computation mechanism introduced through Finance Act, 2012 militates against the principles of horizontal and vertical equity and violative of Articles 4 and 25 of the Constitution and as such tantamount to maladministration. It was also observed that Finance Act, 2012 appears to have been passed without a debate or discussion in the Parliament and any assistance by the FBR.

Through an order, tax relief was provided to the salaried class across Pakistan as per one of the major relief recommended by former FTO Dr Muhammad Shoaib Suddle for salaried class in his order. As a result of the FTO’s working on tax slabs for salaried individuals, there will be a sharp cut in income tax deduction up to Rs 165,000 for such taxable persons.

As per order the FTO has directed the FBR to take urgent steps to address the glaring anomalies in upper income tax slabs of the salaried class as introduced through Finance Act, 2012. The FTO Office has proposed revision in the tax slabs number 4, 5 and 6 as per Finance Act 2012. The said three slabs have been proposed to be revised by the FTO extending a major tax relief to salaried persons falling within these categories.

It is also pointed out by the Petitioner though the government has provided quite a handsome relief to low and average class salaried taxpayers and the tax benefit is to be gradually decreased with the increase in salary under the new slab structure for the salaried class as per Finance Act 2012, however, in the last three slabs where the fixed component does not tally with the maximum tax factor of earlier slab, it was a blatant error of commission at the part of FBR, which was thrown away by the FTO under Own Motion action.

In the order passed by President, recommendations issued by FTO in suo-motu case (salary slabs) have been reversed by the said order issued by the President has now been challenged before LHC on the grounds that representation filed by FBR under section 32 of the FTO Ordinance, 2000 against the order passed by the FTO is patently illegal, without lawful jurisdiction and void ab-initio. The President accepted the illegal representation against the order passed by the FTO. It is the duty of Respondents to dispense justice and functionaries representing Respondent’s departments are supposed to uphold the dignity of law, Petitioner added.

Recorder Report

Source: Business Recorder

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