Supreme Court Directs FBR to Recover Super Tax from Big Companies
Supreme Court Directs FBR to Recover Super Tax from Big Companies. The Supreme Court has issued orders to recover Super Tax from wealthy organizations whose income is over Rs150 million. Supreme court directed to deposit 50% of the super tax imposed by FBR within seven (7) days.
Supreme Court of Pakistan (SCP) on Monday ordered the taxpayers to pay half of the super tax within seven days, Federal Board of Revenue (FBR) communicated this through a tweet.
According to FBR, the parliament imposed a super tax on the profits of wealthy corporations whose earnings exceeded Rs 150 million through the Finance Act 2022. Previously, the Honorable Lahore High Court stayed the imposition of this levy through an interim order.
“Today, on petitions filed by FBR, the Supreme Court directed that 50 per cent of the due liability be paid within 7 days,” according to the spokesman.
The super tax has been imposed through Finance Act, 2022 by inserting Section 4C to the Income Tax Ordinance, 2001.
The following sectors were to be taxed included:
- cement,
- steel,
- banking,
- airlines,
- textile,
- automobile assembling,
- sugar mills,
- beverages,
- oil and gas,
- fertiliser,
- cigarettes,
- chemicals and LNG terminals.
Moreover, a two-member bench including Chief Justice of Pakistan (CJP) Umar Ata Bandial and Justice Athar Minallah took up the plea filed by the Federal Board of Revenue (FBR) against the interim order passed by the Lahore High Court (LHC).
The apex court after suspending the interim order of the high court, allowed the Federal Board of Revenue (FBR) to recover 50% of the super tax from such big industries within a week (seven days).
What is Super Tax Rate in Pakistan?
The FBR said that a new section 4C to Income Tax Ordinance, 2001 has been introduced through Finance Act, 2022 and this section will apply for tax year 2022 and onwards.
Except for the persons whose income as envisaged in this section is below Rs150 million, all other persons including those assessed under Fourth, Fifth and Seventh Schedules to the Ordinance are liable to pay super tax on graduated rates ranging from 1% to 4% based on graduated income slabs provided in Division JIB of Part I of First Schedule given as under:
| Income under Section 4C | Rate of Tax |
| 1- Where income does not exceed Rs150 million | 0% of the income |
| 2- Where income exceeds Rs150 million but does not exceed Rs200 million | 1% of the income |
| 3- Where income exceeds Rs200 million but does not exceed Rs250 million | 2% of the income |
| 4- Where income exceeds Rs250 million but does not exceed Rs300 million | 3% of the income |
| 5- Where income exceeds Rs300 million | 4% of the income |
However, for tax year 2022 the rate of super tax under this section will be 10% instead of 4%, where the income of the persons engaged, partly or wholly, in business of airlines, automobiles, beverages, cement, chemicals, cigarette & tobacco, fertilizer, iron & steel, LNG terminal, oil marketing, oil refining, petroleum & gas exploration and production, pharmaceuticals, sugar and textiles exceeds Rs.300 million.
For tax year 2023, this super tax on income of banking companies will be 10% if the income for the year exceeds Rs. 300 million.
What is a Super Tax?
A super tax shall be imposed for tax year 2022 and onwards at the rates specified in Division IIB of Part I of the First Schedule, on income of every person. Provided that this section shall not apply to a banking company for tax year 2022.
For the purposes of charging super tax, “income” shall be the sum of the following:—
(i) profit on debt, dividend, capital gains, brokerage and commission;
(ii) taxable income (other than brought forward depreciation and brought forward business losses) under section 9 of the Ordinance, excluding amounts specified in clause (i);
(iii) imputable income as defined in clause (28A) of section 2 excluding amounts specified in clause (i); and
(iv) income computed, other than brought forward depreciation, brought forward amortization and brought forward business losses under Fourth, Fifth and Seventh Schedules.
Where the tax is not paid by a person liable to pay it, the Commissioner shall by an order in writing, determine the tax payable, and shall serve upon the person, a notice of demand specifying the tax payable and within the time specified under section 137 of the Ordinance.
