Islamabad, January 27, 2026 — In a major setback for taxpayers and corporate entities, the Federal Constitutional Court (FCC) on Tuesday upheld the legality of the super tax, paving the way for the Federal Board of Revenue (FBR) to recover nearly Rs300 billion in outstanding dues.
Announcing the verdict, FCC Chief Justice Aminuddin Khan ruled that Section 4B of the Income Tax Ordinance, 2001 remains valid and enforceable. The court dismissed all petitions challenging the super tax, stating that parliament has the constitutional authority to impose taxes through legislation. A detailed judgment will be issued later.
The court rejected objections regarding the maintainability of the case and overturned previous high court rulings that had termed the super tax discriminatory. It clarified that Sections 4B and 4C governing the levy are fully in accordance with the law.
However, the FCC ruled that the super tax will not apply to mudarabah companies, mutual funds, or unit trust funds. It further directed oil and gas sector companies to approach their respective tax commissioners individually if they seek exemptions.
The super tax was originally introduced in 2015 in Khyber-Pakhtunkhwa to finance the rehabilitation of individuals affected by terrorism. At that time, a 5 percent levy was imposed on entities earning annual profits exceeding Rs300 million, and the measure was upheld by all high courts.
In 2022, the government expanded the scope of the super tax, applying it to individuals earning over Rs150 million annually, with rates going up to 10 percent. This move triggered widespread legal challenges from business groups, banks, and corporations, who argued that the tax was retrospective and amounted to double taxation.
The FCC heard the case over 17 hearings. Initially taken up by the Supreme Court in 2019, the matter was later transferred to a constitutional bench and subsequently to the Federal Constitutional Court following the 26th and 27th Constitutional Amendments.
Speaking to the media, FBR representative Hafiz Ihsan Khokhar said the verdict would enable the government to collect approximately Rs310 billion. He added that the court had reaffirmed parliament’s legislative authority and confirmed that the super tax does not involve discriminatory treatment.
In the 2022–23 federal budget, the government imposed the super tax on major sectors including cement, steel, sugar, oil and gas, fertiliser, banking, and textiles, citing the need for additional revenue to stabilise the economy.