The Federal Constitutional Court has upheld the validity of the super tax imposed under Section 4C of the Income Tax Ordinance, setting aside earlier relief granted by the Islamabad High Court and reinforcing the Federal Board of Revenue’s authority to continue its implementation.

In a detailed 293-page judgment authored by Chief Justice Aminuddin Khan, the court ruled that the super tax is constitutional and operates as a distinct levy, separate from regular income tax.

The court held that Parliament is fully empowered to impose taxes on income under existing legal frameworks, and observed that the Islamabad High Court exceeded its jurisdiction by directing the Federal Board of Revenue to issue instructions against enforcement of the tax.

According to the verdict, the super tax will remain applicable from tax year 2022 onwards and covers all categories of income, including those that fall under different or special tax regimes. The court clarified that it is an additional charge and not a substitute for income tax.

The judgment further confirmed that capital gains are included within the scope of the super tax. However, it noted that its application to petroleum and exploration sector companies will depend on contractual and legal considerations.

On exemptions, the court stated that welfare and pension funds must obtain proper certification to claim relief. It also reaffirmed that retrospective taxation through legislation is permissible under the law. At the same time, it clarified that income already exempt under existing provisions—such as certain capital gains, inheritance, specified long-term holdings, and agricultural income—will not be subject to the super tax.