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July 4, 2016

Excessive tax deducted from non-filers: law may be amended to allow adjustment

To practically facilitate the non-filers and encourage documentation, Section 169 of the Income Tax Ordinance, 2001 has been proposed to be amended through Finance Bill 2016 to allow adjustment of excessive tax deducted from non-filers.

It is learnt that the proposed amendment is in line with the order passed by the Lahore High Court (LHC) wherein LHC ordered for adjustment of extra tax deducted by applying rates of non-filer to a petitioner. This amendment will ultimately encourage non-filers to become filer by filing their tax returns.

LHC’s order came in response to petition filed by a tax lawyer Waheed Shahzad Butt challenging the collection of enhanced rates of income tax by treating his status as Non-Filer (Inactive) on the Active Taxpayer List i.e. ”ATL” issued by FBR. Later on the Federal Government proposed a vital amendment in the law and a new sub section (4) has been proposed to be inducted in Section 169 of the Income Tax Ordinance, 2001 which states “Where the tax collected or deducted is final tax under any provision of the Ordinance and separate rates for filer and non-filer have been prescribed for the said tax, the final tax shall be the tax rate for filer and the excess tax deducted or collected on account of higher rate of non-filer shall be adjustable.”

Source: Business Recorder – Excessive tax deducted from non-filers: law may be amended to allow adjustment

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