Islamabad, January 28, 2026 — Banks will be required to pay super tax from tax year 2023 onwards after the Federal Constitutional Court upheld the applicability of super tax under Section 4C of the Income Tax Ordinance, 2001, according to a press release issued by the Federal Board of Revenue (FBR).
In a landmark judgment, the Federal Constitutional Court announced its short order in cases concerning Sections 4B and 4C of the Income Tax Ordinance, commonly referred to as the super tax cases. The court upheld the validity of the super tax, a measure expected to generate around Rs300 billion in revenue for the national exchequer.
During the proceedings, the tax department’s lead counsel, Asma Hamid, presented arguments on behalf of the FBR. The court dismissed taxpayers’ appeals challenging Section 4B and declared it constitutionally valid as a tax. At the same time, it accepted appeals filed by the Commissioners Inland Revenue, the FBR, and the Federation in cases related to Section 4C.
The court ruled that Section 4C super tax is constitutionally valid as enacted and confirmed its retroactive application for tax year 2022. Under the ruling, super tax at the rate of 10% will apply for tax year 2022 to 15 sectors identified in the First Proviso to Division IIB of the ordinance, provided their income exceeded Rs300 million during that year.
Regarding oil exploration and petroleum companies operating under Petroleum and Concession Agreements governed by the Fifth Schedule of the Income Tax Ordinance, 2001, the court directed Commissioners Inland Revenue to issue fresh notices. It instructed that Section 4C be applied strictly in accordance with the law and the specific terms of each agreement, ensuring that agreed caps are not exceeded.
The judgment is expected to have significant implications for banks and other major sectors, reinforcing the government’s revenue measures from tax year 2023 onward.