ISLAMABAD: In what appears to be a blow for the PML-N government, the Federal Board of Revenue has temporarily halted recovery of income support levy on bank deposits from taxpayers.

“We will comply with the court order and accept (income tax) returns without income support levy for the tax year 2013,” FBR chairman Tariq Bajwa told Dawn on Friday.

On Oct 22, the Sindh High Court stayed the recovery of the 0.5 per cent levy while accepting a petition against it for regular hearing on Nov 7.

A large number of people have already paid the levy while filing tax returns.

Finance Minister Ishaq Dar introduced in the budget for 2013-14 the levy on movable assets (cash) to raise at least Rs6 billion from bank account holders.

The levy, which is the brainchild of Mr Dar, has faced opposition from different quarters, particularly businessmen, because it also empowers FBR’s top officials to access bank accounts.

The FBR chairman said that he had received the court order today (Friday). “We will accept returns without income support levy as long as the stay prevails,” he said.

The last date for the recovery and submission of income support levy statement has been extended to Nov 30 from Sept 30.

A senior tax official told Dawn that the FBR had already de-linked the filing of income tax return and statement for the levy. He said that the bureau would accept returns without the levy until the final judgment of the court on the issue.

Meanwhile, taxpayers will have to file returns with wealth statements until Nov 30. In wealth statement, every taxpayer will have to declare his/her movable and immovable assets.

The official said that if the law was not annulled by the court order, notices would be issued to people for the recovery of the levy based on their wealth statements.

The levy will be charged on more than Rs1 million found in the bank account of any person.

According to the court’s interim order, the counsel for the petitioner said that the federal legislature was not authorised to impose the levy after the 18th amendment to the constitution.

The levy was imposed to provide financial resources to distressed persons and families to bring them under a social safety net.

The counsel argued that the levy was discriminatory because it intended to tax taxpayers twice as they were already paying tax and filing their annual returns with wealth statement.

He alleged that the levy had been imposed only to extract money from taxpayers and achieve the financial target. There was no rationale behind the imposition of the levy, he argued.