The Lahore High Court (Rawalpindi Bench) has strongly recommended the waiver of the prescribed court fee for small taxpayers, as the current income tax scheme exempts the Federal Board of Revenue (FBR) from paying court fees, while an ordinary taxpayer is required to pay Rs. 50,000/- per reference.
Major recommendations have been made by LHC Judge Jawad Hassan in favor of taxpayers to address this significant discrimination against small taxpayers.
The LHC observed that the said scheme creates an unequal playing field between the regulator and the regulated. Moreover, it disproportionately discourages small and medium enterprises from pursuing their legitimate grievances in court.
It is, therefore, proposed that the legislature consider either reducing or waiving the prescribed court fee for taxpayers falling under a certain income or turnover threshold, or imposing nominal court fees on the FBR to ensure parity and discourage frivolous litigation initiated by the revenue authority, the court stated.
Dr. Ishtiaq Ahmad Khan, Director General (Law), FBR, who was present in the Court, submitted that the impugned amendment is under review and that these judicial observations will be placed before the appropriate forums for consideration and incorporation in the upcoming tax reforms.
In light of the above proposals, these writ petitions stand disposed of. However, this order shall serve as a guiding reference under Articles 199 and 201 of the Constitution. It is expected that the concerned ministries, including the Ministry of Law and Justice and the Federal Board of Revenue, will meaningfully consider these suggestions while framing legislative or administrative policies in the upcoming amendments to the Income Tax Ordinance.
