Islamabad: Tax experts are raising constitutional concerns over the Federal Board of Revenue’s (FBR) new penalty measures targeting “Late Filers,” a category introduced in the Finance Act 2024. The policy, which imposes higher tax rates on those who file their returns after the deadline, is currently under legal scrutiny following challenges by affected taxpayers.

According to Zameen.Com, the controversy centers on the FBR’s decision to apply the “Late Filers” category retroactively, which legal experts argue violates constitutional limits on ex post facto laws. This issue came to the forefront after a taxpayer petitioned the Lahore High Court (LHC), contesting the FBR’s enforcement actions. The petitioner, listed as ‘Active’ on the Active Taxpayers List, was reportedly pressured to pay advance tax at a rate of 6%—double the standard rate of 3% as stipulated under the applicable sections of the Income Tax Ordinance, 2001.

Farhan Tariq from FB Consultants highlighted that the imposition of this category retroactively, effective from July 1, 2024, lacks legal foundation and could lead to significant legal pushbacks. The “Late Filer” category aims to encourage timely tax submissions by setting higher rates on transactions involving immovable property for those who miss filing deadlines, differentiating them from active taxpayers.

The introduction of this category and the subsequent legal challenges underscore the ongoing debates surrounding tax policy enforcement and the balance between government revenue strategies and taxpayer rights.