Federal Board of Revenue has issued a clarification on a news story appearing in Daily Times wrongly portraying that “a proposed amendment in the Finance Bill, 2021 makes it mandatory to make payment of total assessed demand for filing of first appeal.”

FBR has explained the relevant section of the enforced law to remove the existing confusion in this regard. The fact remains that the law relating to clearing of admitted tax liability that the taxpayer himself worked out, on the basis of returned income. As a sine qua non condition for filing of appeal, has always been on the statute book and it has not been changed and no such thing requiring payment of assessed tax demand for filing of first appeal has been proposed to be added by the Finance Bill, 2021.

FBR further clarified that the only change that has been proposed in the Finance Bill is to substitute the sub-section. Just to correctly re-number the clauses of sub-section (4) of section 127 of the Income Tax Ordinance 2001.

FBR has explained the misunderstanding through an example. For instance, “If Mr A files return while declaring income of Rs 500,000/- and admitted tax liability of Rs 5,000/-.  So he requires to pay it at the time of filing of return. Suppose taxpayer does not pay it subsequently. Then if his assessment amends subsequently under the law and total tax payable determines at Rs 10,000/-. Then Law requires taxpayer to discharge “admitted tax of Rs 5,000/-. In order to make him eligible to avail right to appeal”. This provision of law continues to be part of the Income Tax Ordinance, 2001 since its start.

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