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KARACHI: The Sindh High Court on Thursday put the federal and provincial authorities on notice on a petition filed against imposition of income tax on immovable property by the federal government.

A two-judge bench of the SHC headed by Justice Ashraf Jahan issued notices to the respondents, including the federal finance secretary, Federal Board of Revenue chairman, the Sindh excise and taxation secretary and the Sindh Board of Revenue with the direction to file comments by Sept 27.

Petitioner Ghulam Hussain Memon through his counsel barrister Zamir Ghumro moved the SHC and contended that the federal authorities had unlawfully imposed capital gains tax and withholding tax or advance tax on transfer of immoveable property (real estate) after amending the relevant law in 2012.

The counsel argued that the federal authorities had no power under the Constitution to impose income tax on real estate since it was the domain of the provincial government as provided in Article 142 of the Constitution and entry No. 50 of the Federal Legislative List. He maintained that after the 18th Amendment, only one legislative list (Federal Legislative List) remained in the field and it had no provision for the federal government to impose such taxes.

The lawyer further contended that currently citizens were paying various provincial and local government taxes, including tax on transfer of immovable property by local councils under the Sindh Government Act, 2013, adding that people cannot be subjected to double taxation by the federal as well as the provincial authorities.

The federal government in the Finance Act 2012 had introduced amendments to the Income Tax Ordinance 2001 for collection of advance or withholding tax from seller and purchaser respectively, he added.

However, the counsel argued that these amendments were illegal and ultra vires and also tantamount to double taxation and maintained that the Supreme Court had already ruled that it was not the power of the federal government to levy tax on immovable property.

The petitioner pleaded to declare these taxes as illegal and unconstitutional and also sought an interim restraining order regarding collection of these taxes by the federal authorities till the disposal of the petition.

Published in Dawn, September 7th, 2018