Retrospective tax penalties are ‘unlawful’: Supreme Court

Pakistan's Supreme Court has ruled that tax penalties cannot be applied retroactively to assessments governed by previous law. According to Dawn, a five-judge bench resolved conflicting decisions from twenty nine and twenty sixteen, establishing a clear principle: when tax law amendments are penal in nature, they apply only to assessments made after the amendment takes effect. The court found that taxpayers' financial liabilities crystallize under the law governing their assessment year and cannot later be increased by new legislation, unless the law explicitly permits it.

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