Super Tax upheld as constitutional, high court rulings set aside

ISLAMABAD, (APP - UrduPoint / Pakistan Point News - 30th Apr, 2026) The Federal Constitutional Court of Pakistan has declared Section 4C of the Income Tax Ordinance, 2001, constitutional, upholding the imposition of super tax and setting aside contrary judgments of the Islamabad High Court.

In a detailed 293-page verdict authored by Chief Justice Amin-ud-Din Khan, the court ruled that super tax is a distinct and independent levy, separate from regular income tax, and cannot be treated as a substitute for it. The judgment emphasized that Parliament has full authority to impose taxes on income, and the introduction of super tax under Section 4C falls within constitutional parameters.

The court invalidated Islamabad High Court rulings that had challenged Section 4C, observing that directing the Federal board of Revenue (FBR) to issue circulars in this regard amounted to overstepping jurisdiction.

According to the verdict, super tax under Section 4C will apply from tax year 2022 onward and will be imposed on all income subject to normal taxation.

The court clarified that income not falling within the scope of basic income tax will not be subject to super tax either.

The judgment further stated that income exempt from tax will remain exempt from super tax. Similarly, exemptions will apply to gains from the sale of property or shares where tax relief is available, as well as to inheritance, income earned after specified holding periods, agricultural income, and gains from the sale of agricultural land.

The court noted that Section 4C would also extend to income under separate tax regimes and could be applied to capital gains. In the case of petroleum and exploration companies, the applicability of super tax will be determined in accordance with relevant laws and contractual arrangements.

It was also held that charitable organizations and pension funds seeking exemption from super tax must ensure verification of relevant certificates. The court further ruled that retrospective taxation through legislation is constitutionally permissible.

Addressing concerns of discrimination, the court concluded that imposing higher rates of super tax on specific sectors does not amount to unequal treatment but falls within the legislative competence of Parliament, and therefore does not violate constitutional provisions.