ISLAMABAD: The Supreme Court on Monday modified an interim order of the Lahore High Court (LHC) and directed wealthy taxpayers to deposit their 50 per cent due super tax directly with the Federal Board of Revenue (FBR) within one week.

A three-member bench, headed by Chief Justice of Pakistan Umar Ata Bandial, took up the FBR plea against the impugned interim order which had stayed the recovery proceedings from high-earning taxpayers.

The apex court order came at a time when Pakistan tax authorities are negotiating with the visiting IMF team new taxation measures to check the widening fiscal gap in 2022-23.

The FBR has projected Rs250bn from the imposition of the super tax in FY23.

The final revenue measures are expected to be announced on Feb 9 when the IMF mission will complete its policy discussion and leave for Washington.

Taxpayers challenged the imposition of super tax with retrospective effect for the tax year 2022 and onward before the Lahore High Court (LHC).

The LHC has stayed the recovery proceeding and directed FBR to allow different industries to file their returns excluding the super tax subject to the deposit of post-dated cheques of the differential amount.

Verdict will boost FBR’s collection to bridge shortfalls in FY23

It was further said that the cheques will be encashed at the direction of the court or subject to the final decision of the case.

However, the LHC order of Sept 29, 2022 was challenged in the Supreme Court by FBR through a lawyer Ms Asma Hamid.

Through the Finance Act 2022, the government has imposed a super tax on high-earning persons by inserting a new section 4C in the income tax ordinance. Through the section, FBR imposed a 10pc super tax on 13 sectors earning more than Rs150 million from tax year 2022.

The sectors are steel, banking, cement, cigarettes, chemicals, beverages, and liquefied natural gas terminals, airlines, textile, automobile, sugar mills, oil and gas, and fertiliser.

Since then the decision has been challenged in almost all high courts of the country on various grounds.

In the wake of the Supreme Court order, FBR now expects a sizable revenue collection to bridge the shortfall in the coming months.

FBR revenue collection in the first seven months (July to January) of 2022-23 fell short by Rs214bn or 5.12pc to Rs3.965 trillion against the target of Rs4.179tr.

Advocate Supreme Court Ahsaan Ahmad Khokhar explained that super tax is levied upon a certain class of taxpayers in the rates between 1pc to 10pc on income groups who earn at least Rs150m.

This type of tax was first imposed through the Finance Act of 2015 by the insertion of section 4B in the Income Tax Ordinance for the rehabilitation of displaced persons.

Published in Dawn, February 7th, 2023