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Super tax is constitutionally valid, rules Federal Constitutional Court

ISLAMABAD: The Federal Constitutional Court (FCC) of Pakistan upheld the constitutionality of the super tax introduced under Sections 4B and 4C of the Income Tax Ordinance, 2001, backing the Federal Board of Revenue (FBR).

However, it excluded capital gains from the disposal of immovable property or securities held for a prescribed period, The News reported on Thursday.

The FCC passed its judgement in a case filed by DG Khan Cement Company Limited and others. This judgement vindicates the position pursued by the Federation of Pakistan and the FBR.

The FCC ruled that the super tax is an additional tax on income, drawing its legislative sanction from entry 47, Part 1 of the Federal Legislative List of the Constitution.

“The necessary corollary to the above is that if a certain class of income is exempt from tax under the law regulating it i.e. the ordinance,” the judgement read and added, “For instance, where no tax is payable on capital gains arising on disposal of immoveable property or securities either for being held beyond a certain period or is inherited or is otherwise exempted from the ordinance, no super tax shall be payable on such capital gains on disposal of immoveable property or securities”.

The FCC ruled that the same principle “shall apply” to any capital gains on disposal of agricultural property, which even otherwise cannot be subject to income arising therefrom either by usage or by disposal.

Top official sources in the FBR said that the tax machinery so far collected Rs290 billion on account of Super Tax in the first nine months of the current fiscal year, and it might go up to Rs315 billion by the end of June 2026.

In the extensive and detailed, almost 300-page judgement, the court critically examined several complex taxation issues.

The court held that the super tax levied under Section 4B (introduced by the Finance Act, 2015 for the rehabilitation of temporarily displaced persons from tax years 2015-2022)) and Section 4C (introduced by the Finance Act, 2022 imposed on ‘High Earning Persons’ from tax year 2022 and onwards) is a valid exercise of parliament’s taxing power under Entry 47 of the Federal Legislative List of the Constitution of Pakistan, being a tax on income.

In the case of section 4B, the court rejected the argument that the levy was a fee and not a tax, holding that the mere mention of a purpose did not automatically render the tax a fee in the absence of any direct service linkage to any beneficiary.

The court placed Section 4B squarely within the domain of taxation, validly passed through the Finance Act, thereby upholding all the high courts’ judgements to this effect.

In respect of Section 4C Super Tax, the court further held that the provision is a self-contained provision with its own charge, assessment, and payment mechanism; there is no constitutional bar on so-called “double taxation”.

Significantly, the court reaffirmed the doctrine of judicial restraint in fiscal matters, holding that the wisdom and policy of taxation lie with the legislature, and that judicial review is confined to questions of legislative competence, constitutional compliance, and absence of arbitrariness.

In another significant finding on the jurisdictional side, the court found the FBR and the Commissioner Inland Revenue (if properly authorised) to enjoy the powers of instituting and defending proceedings relating to tax matters arising from constitutional challenges.

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Health minister orders probe into Sindh MDCAT complaints

ISLAMABAD:Federal Minister for Health Syed Mustafa Kamal has taken notice of alleged irregularities in the Medical and Dental College Admission Test (MDCAT) held in Sindh and ordered a comprehensive inquiry into the complaints.

According to official sources, the minister directed a five-member committee, including the President of the Pakistan Medical and Dental Council (PMDC), to conduct a transparent investigation and submit its report within 15 days.

The committee has been tasked with examining the complaints and reviewing the circumstances surrounding the alleged irregularities during the examination, sources said.

The minister directed the committee to complete the inquiry within the stipulated timeframe and present its findings for further action in accordance with the applicable rules.

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CDA chairman directs faster work on Expressway East project

ISLAMABAD: Capital Development Authority (CDA) Chairman Sohail Ashraf has directed officials to accelerate work on the Islamabad Expressway Service Road East project while ensuring strict compliance with approved designs and construction standards.

During an inspection of the project on Saturday, the chairman reviewed progress and was briefed on ongoing works and the next phase of development.

He directed the project director and relevant departments to maintain continuous field monitoring and quality control and ensure effective traffic management to minimise inconvenience to commuters.

The chairman described the Expressway East project as an important infrastructure scheme for improving connectivity, traffic flow and road capacity in the capital. He also stressed that construction quality should not be compromised in efforts to meet the project timeline.

During the visit, he was also briefed on an ongoing enforcement operation against unauthorised and illegal construction along the Islamabad Expressway.

According to the CDA, 377 buildings have been identified for action, including 281 commercial structures. So far, 58 buildings have been sealed, while 124 buildings between Sohan and Khanna bridges have been marked for demolition.

The authority said Rs234.685 million had been recovered through land-use conversion, unauthorised construction and de-sealing charges. Around Rs3 billion remained recoverable under applicable regulations in connection with land-use conversion and violations relating to unauthorised construction, setbacks, floor area ratio and covered area.

The chairman directed the relevant departments to ensure strict enforcement of building-control and land-use regulations, particularly mandatory fire-safety requirements.

The enforcement operation is being conducted by the CDA’s Building Control Section and Enforcement Directorate in coordination with the district administration and Islamabad police.

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GB ministers call on Governor Kundi

PESHAWAR: Governor Khyber Pakhtunkhwa Faisal Karim Kundi on Saturday held a meeting with a delegation of Gilgit-Baltistan ministers at the Governor’s House here and discussed the country’s political situation and other matters of mutual interest.

The delegation comprised Gilgit-Baltistan Minister for Local Government and Rural Development Zulfiqar Ali Murad, Minister for Health Iqbal Hassan and Minister for Education Aman Ali Ameer.

During the meeting, the two sides exchanged views on the prevailing political situation in the country and various issues of mutual interest. They also discussed the recent elections in Gilgit-Baltistan and the Pakistan Peoples Party’s success in the polls.

The visiting ministers were taken on a tour of the Governor’s House. Governor Kundi presented them with traditional shawls and caps.