Karachi, July 2, 2023: The Finance Act, 2023 has introduced progressive rates of Super Tax with an enhanced threshold, bringing changes to the existing super tax rates previously enacted for the tax year 2022. These new rates will apply from the tax year 2023 and onwards.
According to analysts at KPMG Taseer Hadi & Co., despite the implementation of the Finance Act, it has been observed that the provisos that provided a 10% rate for specified sectors for the tax year 2022 and the banking sector for the tax year 2023 have not been removed. The matter is currently under consideration by the Supreme Court of Pakistan, making it sub judice.
Additionally, the Finance Act 2023 has enacted an amendment with retrospective implications under section 147 of the Income Tax Ordinance, 2001. This amendment considers super tax as part of the tax payable while discharging advance tax liability.
Furthermore, an amendment has been made in the Eighth Schedule, which relates to the “rules for computation of capital gains on listed securities.” This amendment empowers the National Clearing Company of Pakistan Limited (NCCPL) to compute and collect super tax. As a result, consequential amendments have been made in section 4C and 100B of the Income Tax Ordinance, 2001, respectively.
The implementation of progressive rates of Super Tax with an increased threshold aims to ensure a fair and equitable tax system. It is expected to generate additional revenue for the government while promoting fiscal stability and economic growth.
Taxpayers and relevant stakeholders are advised to stay informed about these changes and consult with tax professionals to ensure compliance with the updated regulations.
The Finance Act, 2023 reflects the government’s commitment to improving the tax system and fostering an environment of transparency and accountability in Pakistan’s economic landscape.
Here is the table illustrating the rates of tax under section 4C of the Income Tax Ordinance, 2001 for the tax year 2022 and for tax year 2023 and onwards:
| No. | Income under section 4C | Rate of tax for tax year 2022 | Rate of tax for tax year 2023 and onwards |
| 1 | Where income does not exceed Rs. 150 million | 0% of the income | 0% of the income |
| 2 | Where income exceeds Rs. 150 million but does not exceed Rs. 200 million | 1% of the income | 1% of the income |
| 3 | Where income exceeds Rs. 200 million but does not exceed Rs. 250 million | 2% of the income | 2% of the income |
| 4 | Where income exceeds Rs. 250 million but does not exceed Rs. 300 million | 3% of the income | 3% of the income |
| 5 | Where income exceeds Rs. 300 million but does not exceed Rs. 350 million | 4% of the income | 4% of the income |
| 6 | Where income exceeds Rs. 350 million but does not exceed Rs. 400 million | Same as above | 6% of the income |
| 7 | Where income exceeds Rs. 400 million but does not exceed Rs. 500 million | Same as above | 8% of the income |
| 8 | Where income exceeds Rs. 500 million | Same as above | 10% of the income |
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