SC allows FBR to recover super tax.

ISLAMABAD -- The Supreme Court, while setting aside the Lahore High Court interim order, has directed taxpayers/respondents to pay 50 per cent of their due liability through 'super tax'.

A division bench of the apex court, comprising Chief Justice of Pakistan Umar Ata Bandial and Justice Athar Minallah, heard the Federal Board of Revenue's (FBR) petition against the LHC interim order.

Last year, Prime Minister Shehbaz Sharif had imposed a 10 per cent super tax on large-scale industries in a bid to shore up revenues amid rising inflation.

Meanwhile, Hafiz Ahsaan Ahmad Khokhar, who was arguing the FBR cases before the superior courts, explained that through the Finance Act 2022-2023, parliament had introduced Section 4C in the Income Tax Ordinance 2001, and the government at the time of passing of the budget had hoped to collect Rs215 billion to Rs247 billion under the head.

Khokhar said that as per the language of Section 4C of the Ordinance, a super tax shall be imposed for the tax year 2022 and onwards at the rates specified in Division IIB of Part I of the First Schedule, on the income of every person where income exceeds Rs150 million.

According to the senior tax advocate, for tax year 2022 the rate of super tax under the section will be 10 per cent instead of four per cent, where the income of the persons engaged, partly or wholly, in the business of airlines, automobiles, beverages, cement, chemicals, cigarette and tobacco, fertilizer, iron and steel, LNG terminal, oil.

The tax lawyer said that for tax year 2023, this super tax on income of banking companies will be 10 per cent if the income for the year exceeds Rs300 million.

Khokhar said that it was a very high rate of income tax or company tax paid by those with a very high level of income or profit to help make up the deficit in the public spending budget or to allocate the amount for poverty alleviation in the country.

He explained that the super tax was levied on a certain class of taxpayers in the rates between 1 per cent to 10 per cent on income groups who earn at least Rs150 million and that kind of tax was first introduced through the insertion of Section 4B of the Income Tax Ordinance (ITO) of 2001 for the rehabilitation of displaced persons through the Finance Act of 2015.

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