Karachi, May 3, 2025 — The Karachi Tax Bar Association (KTBA) has called on the government to abolish the mandatory payment condition that requires taxpayers to deposit 30% of the disputed tax amount before obtaining a stay order from the High Court.
In its budget proposals for the fiscal year 2025–26, the KTBA raised serious concerns over Section 133 of the Income Tax Ordinance, 2001. The condition for payment was introduced under the Tax Laws (Amendment) Act 2024, making it compulsory for taxpayers to pay 30% of the assessed tax demand—either determined by the Appellate Tribunal or the Commissioner Appeals—before a stay can be granted.
According to the KTBA, this payment condition places an unfair financial burden on taxpayers. Many tax demands raised by the authorities are either excessive or baseless, and forcing a taxpayer to pay 30% upfront simply to exercise their right to appeal is highly unjust. KTBA warned that such a condition may even encourage the issuance of inflated tax assessments just to collect 30% of the amount in advance.
The association further stated that in cases where the taxpayer eventually wins in court, obtaining a refund of the 30% paid can be a long and difficult process. This adds to the frustration and financial stress faced by taxpayers.
KTBA strongly recommends that the payment condition be completely removed, especially in cases where the tax dispute is genuine and under judicial review. The current law discourages taxpayers from pursuing their legal rights and undermines trust in the tax system.
Removing this condition for payment would not only ease financial pressure on taxpayers but also promote fairness and transparency. It would ensure that access to legal remedies remains open to all, not just those who can afford to make large upfront payments.
KTBA believes this reform will support better compliance, reduce unnecessary litigation, and maintain balance between tax collection and taxpayer rights. It urged the government to take this suggestion seriously and eliminate the 30% payment condition in the upcoming budget.