Islamabad: The Federal Board of Revenue (FBR)’s attempt to implement a penalty on the newly introduced “Late Filers” category is under review, according to news sources.
The FBR introduced this category via Finance Act 2024, but experts argue that applying it retroactively is unconstitutional. Taxpayers have turned to the Lahore High Court (LHC) to contest the FBR’s move. The court has been informed that despite the petitioner’s status as ‘Active’ in the Active Taxpayers List, they are being pressured to pay advance tax at an elevated rate of 6%, rather than the 3% rate prescribed under Division-XVIII of Part-IV of the First Schedule of the Income Tax Ordinance, 2001. The petitioner claims this enforcement lacks legal justification and is contrary to the applicable law.
Farhan Tariq from FB Consultants explained that the new “Late Filers” category, set to take effect from July 1, 2024, cannot be applied retroactively. The news report said that retrospective enforcement of the law is both illegal and likely to face significant legal challenges. The Finance Act 2024 has introduced the “Late Filer” category, creating a third classification of taxpayers who file their returns after the due date. These late filers will face separate, higher tax rates on transactions involving immovable property compared to active taxpayers. This new measure aims to incentivise the timely filing of tax returns.
