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SC orders big industry to pay 4% super tax

ISLAMABAD: The Supreme Court imposed a 4% super tax on large-scale manufacturing industries on Thursday.

A three-judge panel comprised of Chief Justice Umar Ata Bandial, Justice Ayesha A. Malik, and Justice Athar Minallah heard appeals from the federal government and the Federal Board of Revenue (FBR) regarding super tax recovery.

It should be noted that various industries challenged the super tax levied in the budget 2022-23 with retroactive effect, and the Sindh High Court invalidated the collection of the 10% super tax from the previous fiscal year.

Prime Minister Shehbaz Sharif announced a 10% tax on major industries such as cement, steel, sugar, oil and gas, fertilizers, LNG terminals, textiles, banking, automobiles, chemicals, beverages, and cigarettes last year.

The government introduced a new section C-4 in the Income Tax Ordinance through the Finance Act 2022 to impose a super tax on high-income earners. The FBR imposed a 10% super tax on 13 sectors earning more than Rs150 million through this section, with a retroactive effect from July 1, 2021.

The decision has since been challenged on various grounds in nearly all of the country’s high courts. Similarly, over 100 petitions were filed in the Sindh High Court challenging the constitutionality of the Finance Act 2022 provisions.

According to the petitions, the federal government imposed a tax on past transactions in the Finance Act 2022.

On December 22, 2022, the Sindh High Court declared the previous fiscal year’s tax implementation invalid and stated that the tax would be applicable beginning with the current fiscal year.

However, the federal government and the Federal Board of Revenue (FBR) filed a Supreme Court challenge to the ruling.

In its decision on the aforementioned appeals, the Supreme Court ordered that all parties pay a 4 percent super tax.

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