As the countdown to the federal Budget 2025–26 begins, the future of the controversial super tax hangs in the balance.
Widely criticized by both corporate entities and individual taxpayers, the super tax—originally introduced as a temporary measure—has sparked intense discussions across Pakistan’s financial and legislative corridors.
Sources within the Federal Board of Revenue (FBR) have confirmed that extensive internal debates are ongoing regarding the fate of the super tax, especially as it remains entangled in constitutional litigation. With conflicting High Court rulings and a pending decision before the Supreme Court of Pakistan, the FBR finds itself under mounting pressure to either revamp or abolish the super tax mechanism altogether.
Stakeholders from across the economic spectrum—tax professionals, business chambers, trade councils, and financial experts—have voiced strong opposition to the continuation of the super tax. The Institute of Chartered Accountants of Pakistan (ICAP), in its formal budget recommendations, highlighted the adverse impact and legal uncertainty surrounding this tax. They emphasized the need for a revenue strategy that is both effective and free from prolonged court battles.
“The super tax has become an unnecessary burden mired in legal complexity,” ICAP stated. “It’s time to explore alternative, litigation-free means of revenue collection from high-earning individuals and corporations.”
ICAP has suggested the complete withdrawal of Section 4C of the Income Tax Ordinance, 2001—under which the super tax is currently imposed. As an alternative, they propose amending Clause (i) of Sub-section (2) of Section 4C to exclude income from brokerage and commission, and to better define the treatment of dividends, profit on debt, and capital gains—particularly when such income is taxed under final or fixed regimes.
The super tax, first introduced in the Finance Act 2022, was meant to enhance revenue collection during economic hardship. However, with a new budget around the corner, all eyes are now on the government to decide whether this controversial tax will survive—or be laid to rest once and for all.