KARACHI: A sizeable amount of government revenue is stuck up as the Sindh High Court has stayed recovery of Super Tax because of a petition filed by a leading brokerage house in Karachi.
Super tax was imposed for Tax Year 2015 only for rehabilitation of temporary displaced persons on companies having income of Rs500 million or above per annum. The tax is to be paid by banking companies at the rate of 4.0 percent of income and by all other taxpayers at 3.0 percent of income.
The revenue body estimated earning Rs22 billion from the levy while the government had estimated the cost of rehabilitation of displaced persons and security enhancement at over Rs180 billion.
A brokerage house in Karachi had approached Sindh High Court challenging the levy for it being unconstitutional and discriminatory in nature.
The official maintained that since the court had stayed the proceedings, the Inland Revenue authorities were unable to recover super tax.
There are hundreds of companies/taxpayers having annual income of Rs500 million or above and unless the Court decides the matter, authorities could not proceed with the recovery.
The official said recovery of revenue to the tune of billions of rupees was stuck up due to litigation.
The FBR has found that certain lawyers and legal representatives in courts try to prolong litigation to avoid orders. They obtain stay orders against the tax department and further prolong the cases by using delaying tactics even after expiry of six months of obtaining stay orders. Resultantly, the FBR is unable to proceed against the taxpayers for completion of the tax assessments or recovery of tax arrears.
The disputed tax dues have mounted up to over Rs350 billion. Special Assistant to the Prime Minister on Revenue Haroon Akhtar Khan had announced in November 2015 that government was considering offering an out-of-court settlement to thousands of litigants in order to realize the revenue. No such scheme was introduced so far.
However, sources said a short-time scheme in this regard may be offered after the Federal Budget 2016-17 since the amount stuck in court cases was of no use to the Federal Board of Revenue (FBR).