IHC declares section on super tax unconstitutional

Court’s ruling stated super tax will not apply to taxpayers from whom tax is collected in the form of final tax

ISLAMABAD:

Disposing of petitions filed against the imposition of the super tax, the Islamabad High Court declared Section 4C of the 2001 Income Tax Ordinance, which imposed the super tax, as unconstitutional. The court ruled in favour of several companies, including Fauji Fertiliser Company Limited, that had filed petitions against the imposition of the super tax.

The court’s ruling stated that the super tax will not apply to taxpayers from whom tax is collected in the form of final tax. This move comes in light of the Supreme Court’s ruling in the Imrana Tiwana case.

Furthermore, the court found the attempt to amend the definition of income in Section 4C, which aimed to eliminate losses, depreciation, and amortisation allowances from prior years’ income, as unconstitutional.

The super tax will no longer apply to the Benevolent Fund either.

The court also ruled that petroleum and exploration companies cannot be charged more than the tax rate fixed in their agreements, thereby limiting the imposition of the super tax on them. Additionally, it found the decision to impose super tax on ten specific industries as discriminatory.

Published in The Express Tribune, July 21^st, 2023.

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