PESHAWAR: Peshawar High Court has stopped Federal Board of Revenue from acting against six leading private health facilities under the recent changes to the income tax law that made it mandatory to receive charges exceeding Rs200,000 from patients through banking channels.

A bench consisting of Justice Sahibzada Asadullah and Justice Wiqar Ahmad issued notices to the respondents, including the FBR chairman, chief commissioner and commissioner (Inland Revenue) Peshawar, seeking their comments about a joint petition of those health facilities against the relevant amendment to the Income Tax Ordinance, 2001, within a fortnight.

It also issued notices to the attorney general for Pakistan and the federal finance secretary.

The bench declared that in the meanwhile, the impugned provisions of the law should have its normal effect, but no adverse action should be taken against the petitioners in pursuance to issuance of Income Tax Circular No 1 of 2025.

Petition challenges mandatory bank payment move

The petition, filed by Rehman Medical Institute (RMI) and five other health facilities, requested the court to declare illegal the impugned Section 21(s), which was inserted in the Income Tax Ordinance, 2001, through the Finance Act, 2025, in conflict with provisions of the Constitution, and ineffective against petitioners.

They sought declaration of the court to the effect that the impugned Section 21(s) was manifestly arbitrary in as much as it obligated the customer, consumer and service recipient to make payment exceeding Rs200,000 through banking channels. However, in default by the payer, the penalty liability had unlawfully being shifted on the service provider and petitioners.

They also requested the court to declare that the Income Tax Circular No. 1 of 2025 is illegal and unconstitutional.

Senior lawyer Aamir Javed appeared for the petitioners and contended that the Income Tax Ordinance was abruptly amended through the Finance Act, 2025, where after the controversial Income Tax Circular, 2025, was issued on Aug 2.

He argued that through that amendment and circular, the petitioners and other service providers had been mandated to receive all the funds from patients through banking channels and in case of violation, a heavy penalty proportional to the amount received was made “leviable” on the petitioners.

The lawyer argued that the petitioners being health care providers also offered emergency services and in case of emergencies it would not be practicably possible for the petitioners to get the payment routed through a banking channel when the necessary infrastructure had not been put in place for the purpose.

He contended that the impugned legislation and the ensuing circular violated fundamental rights of not only the petitioners but those related to them.

The counsel said that the impugned restriction carried a penalty for the petitioners in cases where patients were treated and charged on a “cash basis.”

He said that the petitioners, to escape the punitive action, were left with no alternative but to refuse to entertain patients who were unable to pay care charges through banking channels.

“The objective desired to be achieved through the impugned amendment may be suitable for ordinary retail transactions. However, its application to essential services, particularly the health care, is a violation of the people’s fundamental rights,” he argued.

Mr Javed said that the impugned amendment would stifle the operation of essential health services.

He contended that restricting access to healthcare on the basis of the people’s banking status was patently discriminatory and against public policy.

Published in Dawn, September 13th, 2025