Islamabad, June 11, 2025 – In a move that has sent ripples across Pakistan’s corporate and high-net-worth sectors, the government has proposed a dramatic revision of the super tax regime through the highly anticipated Finance Bill 2025.
These changes, once approved by the National Assembly, will become effective from July 1, 2025, impacting income earned during the tax year 2026.
Described by experts as a “super shift” in the fiscal policy landscape, the proposed super tax rates signal both relief and reinforcement — a calculated balance between political pragmatism and economic necessity.
Under the new proposal, individuals and entities earning up to Rs150 million annually will continue to enjoy a 0% super tax rate — a status quo that remains untouched. Similarly, the top slab, applicable to those raking in over Rs500 million a year, will still be subjected to a hefty 10% super tax. However, the real action lies in the middle-income slabs, where notable reductions have been made.
In a move likely influenced by lobbying from affluent sectors, the government has slashed the super tax burden for several income brackets. For instance:
• Those earning between Rs200 million and Rs250 million will now pay 1.5%, down from 2%.
• Income between Rs250 million and Rs300 million will be taxed at 2.5%, previously 3%.
• Similarly, slabs extending up to Rs400 million will see tax rates fall by 0.5% to 1%.
These adjustments are being seen as an attempt to provide breathing room to mid-tier business groups and non-banking corporate entities struggling with inflation, rupee volatility, and higher operational costs.
The super tax, governed by Section 4C of the Income Tax Ordinance, 2001, was originally introduced as a revenue-enhancing tool targeting high-income individuals and entities. It applies not only to taxable business income but also to capital gains, dividends, and other passive income sources. Banking companies, however, are exempt from this provision for tax year 2022.
While the government touts the reductions as a “rationalization” of tax policy, critics argue that the changes disproportionately favor the wealthy elite, especially since the top rate of 10% remains intact — creating what some have called a “super ceiling” of fiscal leniency.
Failure to pay the super tax will trigger strict recovery mechanisms as per the Ordinance, empowering the Commissioner to issue demand notices and enforce collections with full legal force.
With Pakistan’s economy battling a tight fiscal deficit and seeking renewed IMF support, the strategic recalibration of the super tax regime signals an attempt to widen the compliance net without stifling business confidence. The coming weeks will reveal whether the National Assembly endorses this controversial proposal — or if a fresh wave of debate will reshape the future of Pakistan’s “super taxation” era.