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SHC issues notices on petition filed against IT on immovable property

SHC issues notices on petition filed against IT on immovable property

KARACHI: The Sindh High Court has issued notices to the federal and provincial governments on a petition against the imposition of income tax on immovable property (real estate) by the federal government.

Petitioner Ghulam Hussain Memon submitted that the federal government has imposed taxes, including capital gain tax and withholding tax or advance tax, on immoveable properties which was illegal and unconstitutional.

He submitted that citizens were paying various provincial and local government taxes, including tax on the transfer of immovable property by local councils under Part II of Schedule V of Sindh Local Government Act and they could not be subjected to double taxation by the federal as well as provincial government.

The petitioner’s counsel Zamir Ghumro argued that the federal government has no power under the Constitution to impose income tax on real estate as it comes under the authority of the provincial government under Article 142 of the Constitution and Entry 50 of the federal legislative list part I of the fourth schedule. He submitted that the tax was being realised from 2012 without lawful authority. He submitted that Constitution is clear on this point and the Supreme Court has already held that federal government has no power to levy tax on immovable property.

The court was requested to declare that the federal government has no jurisdiction to legislate in relation to the capital gain tax on immovable property and withholding tax on transfer/sale or purchase of immovable property and the act of receiving such tax by the federal government is illegal and in violation of the Constitution.

The petitioner’s counsel also sought a restraining order with regard to collection of tax by the federal government on immovable properties in the province and details of such recovery. After a preliminary hearing of the petition, the court issued notices to the federal and provincial governments, ministry of finance and others and called for their comments by September 27.