Banking companies, fertiliser businesses and other high-income taxpayers remain subject to super tax under updated Income Tax Ordinance
ISLAMABAD: The Federal Board of Revenue (FBR) has notified the super tax rates applicable for Tax Year 2027, effective from July 1, 2026, following the release of the updated Income Tax Ordinance, 2001, incorporating amendments introduced through the Finance Act, 2026.
The revised provisions under Section 4C of the Income Tax Ordinance prescribe separate super tax rates for banking companies, certain specified sectors and other high-income taxpayers based on their taxable income.
Under the updated law, banking companies with taxable income exceeding Rs150 million will continue to pay a 10 percent super tax on their income. The same 10 percent rate will also apply to taxpayers whose income is computed under Part I of the Fifth Schedule, up to the limit specified in Rule 4, as well as businesses deriving income from the sale of any kind of fertiliser, provided their taxable income exceeds Rs150 million.
For all other persons, including companies and taxpayers not falling within the specified categories, a super tax of 8 percent will apply where taxable income exceeds Rs500 million.
Super tax structure for Tax Year 2027
The notified super tax rates are as follows:
• Banking companies: 10 percent where taxable income exceeds Rs150 million
• Persons covered under Part I of the Fifth Schedule: 10 percent where taxable income exceeds Rs150 million
• Persons deriving income from the sale of fertiliser: 10 percent where taxable income exceeds Rs150 million
• All other persons: 8 percent where taxable income exceeds Rs500 million
The FBR said these rates will apply in determining tax liabilities for Tax Year 2027, which commenced on July 1, 2026, for most taxpayers.
Historical provisions retained
The updated Income Tax Ordinance also retains historical provisions relating to super tax applicable in previous tax years.
These include the 10 percent super tax imposed for Tax Year 2022 on specified sectors where taxable income exceeded Rs300 million. The sectors covered included airlines, automobiles, beverages, cement, chemicals, cigarettes and tobacco, fertiliser, iron and steel, LNG terminals, oil marketing, oil refining, petroleum and gas exploration and production, pharmaceuticals, sugar and textiles.
Similarly, banking companies remained liable to pay a 10 percent super tax for Tax Year 2023 where taxable income exceeded Rs300 million.
Finance Act 2026 amendments
The notified rates form part of the updated Income Tax Ordinance, 2001, reflecting all amendments made up to June 30, 2026, through the Finance Act, 2026.
The updated provisions provide clarity on the super tax obligations of banking companies, fertiliser businesses and other high-income taxpayers. Eligible taxpayers are required to incorporate the applicable super tax into the computation of their income tax liabilities for Tax Year 2027 and ensure compliance with the revised provisions while preparing their tax returns.