Imposition of a minimum slab of Rs20,000 as advance tax under the Finance Act 2018 demands an early notice of Chairman Federal Board of Revenue (FBR), as a tax can only be imposed on 'income' and not on anything else, much less on expenditure, which is not an income. It may be noted that an amendment was introduced in section 236D of the Income Tax Ordinance 2001 earlier in the Finance Act 2013 and is continuing till date, adding miseries to low-income groups holding functions at marriage halls.
Majority of taxpayers are unable to bear the burden of such additional taxes, which are discriminatory, perverse and arbitrary, and amounts to a direct attack on the pocket of low-income citizens. It may be noted that the marriage halls in the city are charging Rs20,000 as an additional income tax besides the provincial sales tax @5 percent of the total bill against each booking. Tax expert Muhammad Shahid Baig said the power of taxation is an essential and inherent attribute of sovereignty belonging to every independent state or government and is not dependent upon any grant by the constitution or the cost of the citizens, however, constitutional provisions constitute the limitation on the legislative power with respect to taxation.
The unbridled powers and authority to imps tax is regulated under the constitutional restraints, whereby taxes are to be imposed reasonably without discrimination and in such manner that these should not encroach upon the fundamental rights granted under the constitution.
He said the Article 177 and 142(a) read with Entry NO.47 (Part-1) of the fourth schedule of the constitution mandates that the tax may be levied on the income (other than agricultural income), for the purposes of the federation by or under the authority of the Act of Majlis-e-Shoora (Parliament). However, he added, tax can be imposed on income and not on expenditure.
According to him, the income tax is a tax on a person in relation to his income, therefore, before charging such tax, the taxpayer must be shown to have received income or the same has arisen and accrued or deemed to be so under the statute. Any amount which cannot be treated as income and the same cannot be subjected to tax under the above constitutional arrangement.
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