Federal Constitutional Court Upholds Super Tax, Overturns Islamabad High Court Decision

Islamabad: The Federal Constitutional Court has issued a major ruling on the Super Tax case, declaring the judgment of the Islamabad High Court null and void.
In a detailed 293-page verdict announced by Chief Justice Aminuddin Khan, the court upheld the constitutional validity of the Super Tax imposed under Section 4C of the Income Tax Ordinance 2001.
The court ruled that the Super Tax should be treated as a separate levy independent of regular income tax and not as its replacement. It further stated that the tax will apply to Tax Year 2022 and onwards.
The judgment clarified that Parliament holds full constitutional authority to impose taxes on income under the Income Tax Ordinance. It also held that the directions issued by the Islamabad High Court to the Federal Board of Revenue (FBR) for issuing circulars were beyond jurisdiction.
According to the ruling, Section 4C applies to all categories of income falling under a separate tax regime, including capital gains. It also noted that petroleum and exploration companies will be subject to Super Tax in accordance with applicable legal limits and contractual obligations.
The court further stated that welfare and pension funds must obtain verification certificates to claim exemptions from Super Tax. It added that retrospective taxation through legislation is legally valid and that higher tax rates on specific sectors do not constitute discrimination but fall within the legislature’s authority.
The verdict also clarified that income exempt from taxation will automatically be exempt from Super Tax as well. Similarly, exemptions on property sales, shares, inheritance, and agricultural land income will also extend to Super Tax applicability.
The court’s ruling marks a significant development in Pakistan’s taxation framework, reaffirming parliamentary authority over tax legislation.