Outcry over ‘discriminatory’ FBR policy

ISLAMABAD: The FBR’s relaxation for collection of deemed income under 7E for sale and transfer of property and withdrawal of exemption certificate for those living in Punjab has been highly discriminatory.

This modification in the circular issued by the FBR has been disincentivizing those taxpayers who are living in the Islamabad Capital Territory (ICT) and three other provinces Sindh, KP, and Balochistan. Such policymaking shows that the tax policies are being formulated without a well-thought-out strategy.

“Being a federal tax collection agency known as the FBR, how the tax collection machinery has amended the circular in a highly discriminatory manner where tax relief could only be enjoyed by those inhabitants living only in the largest province of the country under the recently modified circular,” top official sources said, adding that the FBR issued the modification to extend only lame excuse for justifying its stance.

The sources said the FBR’s Member Operation for Inland Revenue Service (IRS) Mir Badshah Khan Wazir had represented the FBR before the Lahore High Court in a petition against 7E when he was commissioner IR in Lahore and the court granted its verdict against the FBR. The taxpayers have been contesting against 7E in different courts including the Supreme Court of Pakistan. When the FBR made Mir Badshah Khan Wazir member IR Operation on August 4, 2023, after the change of command at the chairman FBR level with assuming reins by Amjad Zubair Tawana, the FBR preferred to issue the modification in its earlier circular for providing relief to only Punjab’s inhabitants instead of waiting for the verdict of the apex court and decisions on intra-court appeals. The FBR should have implemented tax policies for the whole country but through this precedent, the FBR used the verdict of the LHC for providing relief only to those living in Punjab only under the jurisdiction of the Lahore High Court.

It’s very strange that the taxpayers who belong to the ICT or the other three provinces are bound to pay the deemed income tax under 7E without any relaxation so how the federal tax collection agency is going to justify its tax collection from all those “unfortunate” people who are not living in the largest populace province of the country, according to one tax expert.

When contacted, FBR high-ups argued that they issued modifications in the circular on August 15, 2023 to implement the verdict of the Lahore High Court. This circular will remain operational subject to the verdict of the apex court or reversal by the competent court in an intra-court appeal filed in case of 7E. Those who favoured this move argued that they had filed petitions against 7E with the Lahore High Court and the court granted its verdict in favour of taxpayers. The FBR only implemented the verdict under LHC jurisdiction.

But the question arises what is the purpose of the federal tax collection agency of the FBR when it is only meant for implementing the verdict of the LHC in its jurisdiction? Where is the tax policy of the FBR which is right now lacking at the cost of those who are living outside Punjab? There is no justification for all such policy-making at all that demonstrates discrimination and injustice.