Lahore High Court (LHC) has declared that the enhanced rates of withholding tax on late filers of income tax returns would not be applicable on transactions/returns/assessments completed prior to the promulgation of the Finance Act 2024. In this regard, the LHC has issued an order on a petition filed by the Defence Housing Authority on Tuesday against the Federal Board of Revenue.

LHC order said that the writ petition seeks a declaration from this court to the effect that the amendments made in section 100BA read with Rule 1-A of the Tenth Schedule introduced in the Income Tax Ordinance 2001 through Finance Act 2024 are prospective in nature.

The petitioner is a statutory authority and is engaged in the development of real estate projects. It is liable to pay advance tax/transitional advance tax under the provisions of the Ordinance. The grievance raised by the petitioner relates to the retrospective operation given to the newly added provisions of the Ordinance with the result that the sale/purchase transactions carried out by the petitioner in the context of sections 236C and 236K entails higher rates of income tax as mentioned in the newly added Tenth Schedule. It is furthermore submitted that the newly added provisions have the effect of visiting consequences on the past and closed transactions which is not permissible under the law.

The writ petition has been allowed and it is declared that rule 1-A and its proviso do not have any retrospective operation and that these provisions shall have no effect on the transactions/returns/assessments concluded and completed prior to the promulgation of the Finance Act 2024, LHC order added.