30% Deposit Required for Tax Dispute Stay Orders under FBR New Act

Pakistan’s tax landscape has seen a change with the introduction of the Tax Laws (Amendment) Act, 2024. This amendment impacts taxpayers seeking a stay order from the high court against disputed tax recovery.

What’s Changed?

Previously, taxpayers could challenge disputed tax amounts without any upfront deposit. Now, under the new law, a 30% deposit of the disputed tax determined by the Appellate Tribunal is mandatory to obtain a stay order from the high court. This applies to the Sales Tax Act, Income Tax Ordinance, and Federal Excise Act.

Process and Timeline:

  • A taxpayer can file an application with the high court requesting a stay order on disputed tax recovery.
  • The Commissioner will be given an opportunity to be heard on the matter.
  • If the high court grants a stay order, a minimum 30% deposit of the disputed tax amount must be made to the assessing authority.
  • The stay order remains valid for a maximum of six months from the date of issuance.
  • The stay order either loses effect after six months, is withdrawn by the high court, or remains in place if the reference is decided within the timeframe.

Impact and Implications:

This amendment aims to streamline the process of tax disputes and potentially discourage frivolous challenges. By requiring a 30% deposit, the government hopes to encourage genuine cases while deterring those with weak claims.

Staying Informed:

Taxpayers and businesses in Pakistan are advised to be aware of this new regulation. It’s crucial to consult with a tax professional for guidance on navigating tax disputes and understanding the implications of the 30% deposit requirement for stay orders.

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