Supreme Court CB questions distribution of super tax funds to provinces

The Supreme Court of Pakistan on Tuesday raised constitutional concerns over whether the federal government has the authority to allocate funds collected from the super tax to the provinces.

A five-member constitutional bench, headed by Justice Aminuddin Khan, heard the case challenging the legality of the super tax and its distribution.

During the hearing, Justice Jamal Khan Mandokhail questioned if the federal government was constitutionally permitted to distribute the super tax revenue — whether it amounted to Rs8 or Rs8 trillion — among the provinces.

Senior lawyer Makhdoom Ali Khan began his arguments, stating that income tax, including the super tax, is collected without any specific allocation and is deposited into the national treasury.

He argued that according to the 1973 Constitution, tax proceeds are not meant for provincial distribution unless specified.

He explained that the super tax, introduced in 2016, was initially imposed to fund the rehabilitation of displaced persons.

It was extended in 2017 and made open-ended in 2019, but no funds had yet been spent on the stated purpose.

Makhdoom also emphasised that there is a clear difference between income tax and super tax, and that tax laws under the Income Tax Ordinance’s Section 113 apply to minimum income as well.

Additional Attorney General Hafiz Ahsan clarified that the current proceedings did not concern the distribution of funds, and that no court orders had been issued on the matter.

Justice Aminuddin Khan asked Makhdoom how much longer he would need to conclude his arguments, to which the lawyer responded he would attempt to wrap up by the day after tomorrow.

The court adjourned the hearing till Wednesday, with Makhdoom to continue presenting his case.