As the government rolled out the Tax Laws (Amendment) Act, 2024, thousands of tax cases have been bottlenecked at various tribunals, casting a shadow over the efficacy of the new legislative framework.
This stall in proceedings is largely attributed to the failure to amend supporting rules, rendering parts of the new tax regime effectively non-functional.
Experts in the field have pointed out critical issues post-promulgation of Tax Laws Amendment 2024. Among the most pressing is the lack of amended rules for the appointment of members to tribunals and for their constitution, case management, and overall functioning as mandated by the amended section 130(2) of the Income Tax Ordinance 2001. “These rules are essential for the seamless operation of the tax system, and their absence has led to considerable dysfunction,” noted a senior tax advisor.
Further complicating matters, the required forms of appeal to the Tribunal, governed by Rule 77 of the Income Tax Rules 2002, along with other pertinent rules, have yet to be updated to reflect the changes introduced by Tax Laws Amendment 2024. This oversight has left many tax professionals and their clients in a state of uncertainty and has significantly slowed the resolution of pending cases.
The lack of operational rules and updated forms is not just a procedural delay but poses a significant risk of legal challenges. The Federal Board of Revenue (FBR) has come under scrutiny for what many experts deem as total incompetence. “The inefficacy to align the statutory tools with legislative changes has not only caused embarrassment but has also impeded the functionality of an entire sector,” added another tax professional.
Moreover, Tax Laws Amendment 2024 introduced a contentious amendment under section 132(3), stipulating that no adjournments would be granted at the Appellate Tribunal of Inland Revenue (ATIR) except upon the payment of a minimum penalty of Rs 50,000. This amendment has been described as “horrible” by practitioners, who argue it restricts fair access to justice and expedited hearings without due consideration for genuine cases that might warrant delay.
The issues surrounding the implementation of Tax Laws Amendment 2024 call for urgent legislative and administrative action to amend and promulgate the necessary rules. Without these changes, the new tax law risks becoming ineffective, potentially leading to a backlog of cases and increased legal disputes. Tax experts continue to urge the government to address these lacunas swiftly to restore functionality to the tribunal system and uphold the integrity of the nation’s tax legislation. As it stands, the tax community and affected taxpayers are keenly awaiting a resolution that will allow the smooth processing and adjudication of cases, crucial for the maintenance of fiscal order and justice.
