Is the new Section 103B of the Income Tax Act fair to taxpayers?

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Section 103B of the Income Tax Act is considered unfair to taxpayers.

The introduction of Section 103B to the Income Tax Act is viewed as an unfair measure that disadvantages taxpayers. This provision mandates that tax is payable regardless of whether legal proceedings are underway to dispute the assessment. This effectively means taxpayers must pay first and seek recourse later, which is argued to be a violation of natural justice principles and undermines the jurisdiction of the courts.
Taxpayers Must Pay Before Dispute Resolution

Under the newly gazetted Section 103B of the Income Tax Act, taxpayers are compelled to settle their assessed tax liabilities even when the amount is under legal challenge. This contrasts with previous practices where individuals or businesses could apply to the High Court for a stay order through a judicial review. Such a stay order would permit the withholding of tax payments until the conclusion of the legal case, allowing for a fair review of the dispute.
Violation of Natural Justice and Court Jurisdiction

The core criticism of Section 103B is that it constitutes a denial of natural justice. By requiring immediate payment, it prevents taxpayers from having their grievances heard and resolved before being financially obligated. This bypasses the established legal process and limits the effective jurisdiction of the courts in tax dispute cases, forcing a "pay first, talk later" scenario that disadvantages the assessed party.
Economic Hardship Amidst Pandemic

The implementation of this section has drawn particular concern given the economic pressures faced by businesses and taxpayers due to the Covid-19 pandemic. With many entities already struggling with the economic recession, the Inland Revenue Department's ability to demand immediate payment under this new provision can exacerbate financial difficulties. This is seen as a high-handed method by the Perikatan Nasional government to replenish funds, rather than exploring alternative financial strategies.
Alternative Funding Mechanisms Proposed

Instead of implementing measures perceived as punitive towards taxpayers, it has been suggested that the government explore other avenues to address its financial needs. One such proposal is to increase the statutory debt limit, which could allow the government to tap into the domestic debt market's substantial liquidity. Raising the limit from the current 60 per cent of GDP to 65 per cent or even 70 per cent is presented as a more equitable approach to managing public finances during challenging economic times.

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Is the new Section 103B of the Income Tax Act fair to taxpayers?

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