FBR’s IR Policy Wing Refuses to Give Legal Comments on Litigation Involving Windfall Income of Banks

The Federal Board of Revenue (FBR) Inland Revenue (Policy) Wing has outrightly refused to give legal comments on the Constitutional provisions relating to the litigation involving tax on windfall income of banks. Now, a legal adviser will be hired to deal with cases in courts against banks after the refusal of comments from the Inland Revenue (Policy) Wing At present, the cases of banks are pending with the Sindh High Court (SHC), Lahore High Court (LHC) and Islamabad High Court (IHC). The FBR’s Inland Revenue (Policy) Wing may not be able to comment on the Constitutional provisions and delegated legislation, but it can only give its input on the facts of the case, a tax expert said. The cases involve tax statutes as well as the Constitution. Banks have challenged the vires of Income Tax SRO 1588(I)2023 issued under section 99D of the Income Tax Ordinance,2001. Therefore, a Legal Counsel would be required to defend this important case in High Courts. The operation of the SRO 1588(I)/2023 will remain suspended till the next date of hearings at the High Courts. The controversy has been raised regarding vires of section 99D of the Income Tax Ordinance 2001 as well as SRO 1588(I)/2023 which is already pending before this court in a number of petitions. The LHC had stayed tax imposed under section 99D read with SRO1588(I)/2023 dated November 21, 2023 at the rate of 40 percent on foreign exchange income of the banks as windfall gains. Earlier, the Islamabad High Court (IHC) had suspended the SRO 1588(1)/2023.