Karachi, August 14, 2025 – The Federal Board of Revenue (FBR) has released an updated set of guidelines outlining the scope, calculation method, and applicable rates of the super tax for the fiscal year 2025–26, aiming to bring clarity to a measure that has remained under debate since its inception.
The super tax, governed by Section 4C of the Income Tax Ordinance, 2001, was initially introduced through the Finance Act, 2022, as an additional levy on high-income individuals and entities. Over time, the provision has been amended to adjust its impact on various income brackets. The latest amendments under the Finance Act, 2025, are designed to streamline the super tax regime, ensuring both fairness and predictability.
Definition and Scope
Under the revised framework, the super tax will continue to apply from the tax year 2022 onward at rates specified in Division IIB of Part I of the First Schedule. Notably, for the tax year 2022, banking companies remain exempt. The definition of “income” for the purposes of this tax is broad, covering:
• Profit on debt, dividends, capital gains, brokerage, and commission.
• Taxable income under Section 9, excluding brought-forward depreciation and business losses.
• Imputable income under Section 2(28A), minus the categories listed above.
• Income computed under the Fourth, Fifth, Seventh, and Eighth Schedules, excluding certain carried-forward allowances.
Payment and Recovery
Taxpayers are required to pay, collect, and deposit the super tax as per timelines set out in Section 137 of the Ordinance. If payment is delayed or avoided, the Commissioner of Inland Revenue may issue a formal order specifying the amount payable, accompanied by a notice of demand. In the event of continued non-payment, recovery proceedings will be initiated under the relevant provisions of the Ordinance, including those covering advance tax obligations under Section 147.
Rate Structure for FY 2025–26
The updated super tax rates, effective July 1, 2025, reflect a mix of reductions for certain income tiers while maintaining the top-end levy:
• Up to Rs150 million – Exempt (0%).
• Rs150 million to Rs200 million – 1% (unchanged).
• Rs200 million to Rs250 million – 1.5% (down from 2%).
• Rs250 million to Rs300 million – 2.5% (down from 3%).
• Rs300 million to Rs350 million – 3.5% (down from 4%).
• Rs350 million to Rs400 million – 5.5% (down from 6%).
• Rs400 million to Rs500 million – 7.5% (down from 8%).
• Above Rs500 million – 10% (unchanged, and the maximum rate).
Policy Rationale
According to FBR officials, these adjustments aim to create a more progressive structure without overburdening productive sectors. The reduction in some brackets is intended to incentivize reinvestment and promote compliance. At the same time, retaining the top rate ensures that those with the highest earning capacity continue to contribute proportionately to public revenues.
The FBR has emphasized that the super tax remains an important tool for meeting fiscal needs, particularly in light of developmental spending commitments and revenue mobilization targets for FY 2025–26. It has also assured taxpayers that future changes will be subject to stakeholder consultation to minimize uncertainty.
With the new guidelines in place, the tax authority expects both individuals and corporations falling under the super tax net to adjust their financial planning accordingly, while remaining compliant with filing and payment deadlines.