The Federal Board of Revenue (FBR) exempted judicial allowances from income tax. This exemption has been given by honoring court judgments.
The tax machinery this week mentioned that the “judicial allowance and special judicial allowance are exempt from tax. This exemption is available not only in cases of superior judiciary but also in the case of subordinate judiciary.”Statement of Tax Machinery
Exemption based on Court Judgments
The exemption has been provided in compliance with judgment of the Sindh High Court and Peshawar High Court. Sindh High Court Judgment came in July 2020 and judgement of the Peshawar High Court (PHC) arrived in 2017.
Grounds of Exemption
After examination of the grounds on which exemption has been given, the tax authorities interestingly believe that a provincial court judgement was based on weak grounds. It is pertinent to mention here that it is not clear whether the Sindh High Court (SHC) decision has been challenged in the Supreme Court of Pakistan (SCP).
Judgment has taken finality
The Peshawar High Court (PHC) judgement on the judicial allowances already taken finality. Because tax authorities did not challenge it in higher courts.