LSM Industries ordered to pay 4 percent Supertax

Staff Report

ISLAMABAD: Accepting the pleas of the federal government and the Federal Board of Revenue (FBR), the Supreme Court on Thursday ordered large-scale manufacturing industries to pay a supertax amounting to 4%.
A three-judge bench of the SC comprising Chief Justice of Pakistan Umar Ata Bandial, Justice Ayesha A Malik and Justice Athar Minallah heard the case about the collection of super tax from large scale industries and the FBR’s pleas on the matter.
Last month, the Sindh High Court had barred the government from charging 1% to 10% super tax for the year 2022, terming it “discriminatory” and “ultra vires to the Constitution”.
“Sections 4C of the Income Tax Ordinance (ITO) 2001, is read to reflect that the levy shall be applicable from the tax year 2023,” read the SHC order.
However, the federal government and FBR had challenged the SHC’s decision in the top court.
Last year, Prime Minister Shehbaz Sharif had imposed a 10% super tax on large-scale industries — including cement; steel; sugar; oil and gas; fertilisers; LNG terminals; textiles; banking; automobiles; chemicals; beverages; and cigarettes — in a bid to shore up revenues amid the rising inflation.
Through the Finance Act 2022, the government introduced a new section C-4 in the Income Tax Ordinance to impose a super tax on high income earners.
Through this section, the FBR had imposed a super tax of 10%on 13 sectors earning more than Rs150 million in the fiscal year 2022.
The decision was challenged on various grounds in almost all the high courts of the country. Similarly, more than 100 petitions were filed in the SHC challenging the constitutionality of the provisions of the Finance Act, 2022.
The petitions stated that the federal government had also imposed tax on past transactions in the Finance Act 2022.
On December 22, 2022, the SHC had declared the tax implementation invalid from the previous fiscal year.
It added that it would be applicable from the next tax year.
However, the federal government and the FBR filed appeals in the SC.

While ruling on these appeals, the apex court ordered all the parties to pay super tax amounting to 4%.

Earlier on February 6, the SC had modified the interim order of the Lahore High Court and directed taxpayers with higher income to remit 50% of their super tax directly to the FBR within a week.