I. Background (BG)

1. This refers to the related Important TLQCs in trail, blue, italic and double Line (a) 3364 of 28.11.25 about 4B & 4C Super Taxes pending cases to FCCP. Hearing on 1.12.25 cum Major effects (b) 3363 of 28.11.25 about Constitution of the Islamic Republic of Pakistan 

2. We also refer to several Other TLQCs including (a) 3315 of 24.10.25 about Super Tax u/s 4C: Senate proposed 4% while NA levied 10% (b) 3312 of 21.10.25 about of 4B & 4C Super Tax is on Windfall & not Feasible to be taxed (c) 3309 of Sunday 19.10.25 about 4B & 4C Super Tax Imposed without Policy Statement & not an FTR (d) 3308 of 15.10.25 about 4B & 4C Super Taxes are not Retrospective and could be Discriminatory (e) 3305 of 13.10.25 about 4B & 4C Super Tax cannot be Retrospective, as not Beneficial (f) 3304 of 11.10.25 about 4B & 4C Super Tax is not Retrospective - Bangladesh Tax @21% while Pakistan Tax @93% (g) 3301 of 10.10.25 about 4B & 4C Super Tax: Think Tank absence; Additional tax or not; & Industrialists leaving Pakistan as Higher Taxes 

II.  Kasbati & Co Views as to Major Implications

1.  Based on matters in para III and our long experience, we understand that most of the Companies had paid 50%; while got stay from the Supreme Court for the rest (as covered in earlier commentaries) having stay jurisdiction. For the rest of the 50% or even earlier one, several companies have made provisions OR shown as Contingencies OR few may be not have even shown in Contingencies.

2.  Due to several years involved, there will be a Major Cash Flow effect on all Companies (exposed to sections 4B & 4C) Super Tax and even certain high worth individuals.

3.  Those who have shown the same in Contingencies (or have not shown the same) have to face huge expenses and may lead to huge losses.

4.  Based on the 2 days Stock market increasing trend, it appears that either most companies have made provision OR Stock market will take its negative effect shortly. 

5.  The order is not so far available till a few minutes before release of the order. We will share the same as soon as found.

6.  Due to major issue, the may review petition into FCC and affected companies may contact their Advocates in this regard

III. Multiplication

Although all the Commentaries are to the extent of the Subscribed IDs only, however, your Goodself is allowed to share this QC to Impart Knowledge to the maximum Contacts.

IV. Updated Commentary

A. Federal Constitutional Court has upheld the imposition of super tax, with an expected revenue of 300B Rs

1. Further to KQU 3765 of 28.1.26, being an important matter, we would inform you about Federal Constitutional Court has validated the imposition of super tax, with an expected revenue of 300 billion rupees. (Attachment 3428.1) in the ensuing paragraph, in Italics.

2. In a landmark judgement the Federal Constitutional Court hearing the cases involving sections 4B & 4C of the ITO 2001 (super tax cases), announced their short order yesterday, upholding super tax which is expected to fetch revenue to the tune of PKR 300 billion to the public exchequer. 

3. The tax departments lead counsel, Ms Asma Hamid, led the arguments for the FBR. The Court dismissed the taxpayers’ appeals in cases of section 4B and declared section 4B to be constitutionally valid as a tax. The Court also accepted the appeals filed by the CIR, FBR and the  Federation in cases of section 4C super tax, holding it to be constitutionally valid as enacted and retroactively applicable on the tax year 2022. 

4. The Court held that section 4C super tax was to apply at the rate of 10% for the tax year 2022 on 15 sectors identified in the First Proviso to Division IIB of the ordinance if their income had exceeded Rs. 300 million in that tax year. In the application of section 4C to oil exploration and petroleum companies whose business is conducted under Petroleum and Concession Agreements governed under the Fifth Schedule of the Ordinance 2001,

5. The Court directed the Commissioners to issue fresh notices and apply section 4C in accordance with law and the terms and conditions of each agreement keeping in view that the agreed caps in the agreements were not exceeded. The Court held that section 4C super tax is applicable to banking companies for tax year 2023 and onwards.

B. Federal Constitutional Court upholds super tax, dismisses all petitions

1. Further to KQU 3765 of 28.1.26, being an important matter, we would inform you about Federal Constitutional Court upholds super tax, dismisses all petitions (Attachment 3428.2) in the ensuing paragraph, in Italics.

2. The Federal Constitutional Court upheld the validity of the super tax on 27.1.26, ruling that Section 4B of the ITO 2015 will remain in force.

3. FFC Chief Justice Mr Aminuddin Khan read the verdict, noting that the detailed judgment will be issued later, dismissing objections that the case was not maintainable. The court also confirmed that parliament has the authority to levy taxes through legislation.

4. The FCC dismissed all petitions challenging the super tax. The court ruled that oil and gas sector companies should approach the relevant tax commissioner individually to obtain any exemptions.

5. The court rejected high court rulings that had declared the super tax discriminatory, affirming that the legislation is legally valid. The court clarified that Sections 4B and 4C, which govern the imposition of the super tax, are fully in line with the law.

6. It also specified that the tax will not apply to mudarabah, mutual funds, or unit trust funds.

7. The super tax was first introduced in 2015 in Khyber-Pakhtunkhwa to fund the rehabilitation of terrorism-affected individuals. At that time, an additional 5% super tax was levied on those earning annual profits exceeding Rs300 million. All high courts had upheld its implementation.

8. In 2022, the super tax was applied to individuals earning over Rs150 million annually, with a maximum rate of 10 per cent. Various businesspersons, banks, and companies challenged the tax in high courts, arguing against its retrospective application and the risk of double taxation.

9. The FCC has held 17 hearings on the matter. The case was first heard in the SCP in 2019 during the tenure of former Chief Justice Mr Umar Ata Bandial.

10. Following the 26th Constitutional Amendment, the case was transferred to a constitutional bench, which continued to hear proceedings. After the 27th Constitutional Amendment (TLQC3363 of 28.11.25 refer), the case was moved to the Federal Constitutional Court.

11. Representatives appearing included the Revenue Department's Hafiz Mr Ihsan Khokhar, Karachi Commissioner's Dr Shah Nawaz, and the Lahore Commissioner Ms Asma Hamid.

12. Khokar told the media that the verdict will bring Rs310 billion to the federal government. “The Federal Constitutional Court has recognised parliament’s authority to legislate,” he said, adding that the high courts had previously exceeded their powers.

Khokhar also noted that the court confirmed there had been no discriminatory treatment through the super tax.

C. Super Tax u/s 4C Summary

1. The super tax is an additional levy on high-earning individuals, companies, and industries, largely aimed at big corporations. In the 2022–23 federal budget, the government imposed up to 10% super tax on major sectors including cement, steel, sugar, oil and gas, fertiliser, banks, textiles and others, citing the need to raise extra revenue for economic stabilisation.

2. Petitions were filed before the apex court by individuals and organisations challenging the super tax introduced by the PML-N government in 2015 to raise funds for people displaced by Operation Zarb-e-Azb.

3. Earlier last year, the top court questioned whether the federal government could distribute super tax revenue to provinces. Lawyers argued the levy, introduced in 2016 to fund displaced persons, has since been extended but no funds have been utilised for the stated purpose.

V. Further Details & Services

Should you require any clarification or explanations in respect of the above or otherwise, or require Income Tax, Federal & Provincial Sales Tax or Withholding Tax Statement, Advisory, Return Filing or Review services, please feel free to email Mr Amsal at amsal@kasbati.co with CC to info.kasbati@professional-excellence.com, asif.s.kasbati@professional-excellence.com.