LAHORE: A widow has challenged advance tax against cellular phone services, being not liable to pay income tax or file income tax return, said sources.

She has maintained that collection of tax is confiscatory because there is no payable tax against which the withheld tax could be adjusted or credit. She is of the view that she is drawing below the level of taxable income, therefore, she is not liable to file return. Accordingly, she does not fall in the definition of taxpayer under the law. Nevertheless, she is being subjected to tax on payments made to cellular company against mobile phone services.

It may be noted that a person not required to file return and pay tax cannot be subjected to advance tax. Interestingly, the procedure given in the law is also impractical and unreasonable whereby the person receiving the bill is burdened to issue notice to the Commissioner for knowing whether a person is liable to file return and wait for thirty days before finalizing the bill with or without collection of advance tax.

Tax experts are of the view that absence of a person in active taxpayer list and a person not required to file income tax return cannot be equated because a person filing return may be deleted from active taxpayer list by any tax authority for non-compliance.

They said originally advance tax was meant to facilitate the taxpayer as well as department to pay tax in advance based on the tax determined and paid in last tax year, which facilitates the taxpayer for payment of tax in installments besides recovery of tax.

According to these circles, recovery of advance tax from a widow not liable to pay tax or file return is highly unjustified. A tax which diminishes the original property, movable or immovable, is expropriatory and a tax withhold/deducted and not adjusted against any income tax liability is confiscatory.

They said it is globally settled principle of taxation law that a tax cannot be expropriatory or confiscatory, which tales away a citizen property without compensation or destroys the business of a taxpayer.

Copyright Business Recorder, 2024