The court also asked the National Board of Revenue (NBR) to give back the money already extracted from the universities under the authority of the gazette notifications.
The High Court bench of Justice Sheikh Hassan Arif and Justice Bhishmadev Chakraborty delivered the verdict disposing off 46 writ petitions filed by several private universities challenging the government decision.
The NBR in a gazette notification on June 28, 2007 imposed income tax on University Grants Commission-approved private universities. However, private medical, dental and engineering universities and colleges were exempted from the tax.
But on July 1, 2010, another gazette notification was issued saying that all private higher educational institutions have to pay 15% income tax.
One of the lawyers for the petitioners, Mohammad Shakhawat Hossain, said the court declared a Rule Absolute, which it issued earlier questioning the legality of imposing income tax.
Deputy Attorney General Sardar Md Rashed Jahangir said they may move with an appeal against the judgement after the full verdict is published.