Super Tax
22 December 2022
The Honourable High Court of Sindh (“SHC”) has, vide a short Order dated 22.12.2022 (“said Order”),partially allowed the Constitutional Petitions challenging the vires of Section 4C of the Income TaxOrdinance 2001 (“ITO”), also known as the ‘Super Tax’. As per the said Order, the Super Tax will beapplicable from Tax Year 2023, and not the Tax Year 2022. This order imposes that taxpayers that have anormal tax year 2022 (1 st July 2021 – 30 th June 2022) or a special tax year 2022 (1 st January 2021 –December 2021) shall not be liable to pay Super tax with their tax returns. Moreover, Division IIB of PartI of the First Schedule to the ITO, also contained a proviso through which the following persons engagedwholly or partly were liable to pay super tax (for tax year 2022 only) at 10% on their income if theirincome exceeded PKR 300 millions in the following businesses :(i) Airlines; (ii) automobiles; (iii) beverages; (iv) cement; (v) chemicals; (vi) cigarette andtobacco; (vii) fertilizer; (viii) iron and steel; (ix) LNG terminal; (x) oil marketing; (xi) oil refining;(xii) petroleum and gas exploration and production; (xiii) pharmaceuticals; (xiv) sugar; and (xv)textilesThe SHC has declared the aforesaid proviso as discriminatory and ultra vires to the Constitution ofPakistan 1973 (“Constitution”). This means that persons engaged in the aforesaid businesses will beliable to pay super tax at 4% if their income is above PKR 300 million, the same as other persons earningthe same amount of income.Furthermore, the SHC has also suspended the operation of this judgment for 60 days, and directed thatthe bank guarantees/cheques/payorders submitted by the Petitioners as a condition precedent foravailing an ad interim injunction, shall remain with the Nazir of the High Court till the judgment issuspended.It remains to be seen whether the Federal Government will appeal the decision of the SHC before theSupreme Court of Pakistan.
