Jam Kamal chaired a meeting with a delegation of the Pakistan Dairy Association (PDA), led by CEO Dr Shehzad Amin. The meeting was also attended virtually by Rana Ihsaan Afzal, Coordinator to the Prime Minister on Commerce, along with senior officials from the Ministry of Commerce, according to an official statement on Monday.

The discussion focused on the challenges facing Pakistan’s dairy sector, particularly regarding tariff and taxation issues, as well as improving productivity, genetic quality, and the formalisation of the sector.

Kamal emphasised that enhancing the genetic quality of dairy breeds and guiding farmers toward a formalised business model is critical for the sector’s development.

He said that without proper genetic direction, farmers cannot achieve the desired milk yields and that structured support, regulation, and farmer education are essential to transform the sector.

Milk producer Ghani Dairies plans to raise Rs2.5bn via IPO

The association pointed out that the current GST on dairy products is 18%, while globally, and even in neighbouring countries, such products often enjoy zero or minimal taxation.

In response, Jam Kamal asked the association to submit proposals for reducing the GST from 18% to 10% and asked Rana Ihsaan Afzal to take the lead in working closely with the association to prepare a comprehensive proposal.

The minister also stated that he would write letters to the chief ministers and all relevant ministers to ensure coordination and support for implementing these proposals and improving the formalisation of the dairy sector across the country.

The association presented additional proposals, including the provision of financial support and banking facilities for farmers, the implementation of regulatory measures to ensure only pasteurised or properly packaged milk is sold, and the initiation of pilot programs in major urban centres to transition farmers into formal business practices.

They also highlighted the need for cross-breeding programs and farmer training to enhance genetic quality and improve overall milk production.

Jam Kamal welcomed these proposals and stressed that a comprehensive plan should be prepared for timely implementation, ensuring that Pakistan’s dairy sector achieves higher productivity, better regulatory compliance, and contributes more effectively to the country’s economy.

This increase of Rs. 6 billion reflects a strong and sustained improvement in tax compliance, enhanced enforcement, and continued expansion of the service sector tax base across the province.

According to figures released by KPRA’s media wing, the Authority generated a total revenue of Rs. 38.80 billion during the first nine months of the ongoing financial year. This includes Rs. 34.60 billion from Sales Tax on Services and Rs. 4.20 billion from Infrastructure Development Cess (IDC).

The overall revenue collection performance of Authority remained stable, with strong gains in Sales Tax on Services effectively reinforcing KPRA’s revenue stream during the ongoing financial year.

Director General (DG) KPRA, Miss Irum Naz, appreciated the performance of the Authority’s officers and staff, attributing the growth in Sales Tax on Services to effective planning, sustained enforcement, and institutional commitment.

“The consistent growth in Sales Tax on Services during the first nine months of the financial year reflects our strategic focus, improved compliance, and the dedicated efforts of KPRA’s workforce,” she said.

“We are confident that with continued focus and a data-driven approach, the Authority will achieve its annual revenue targets.”

The Director General also expressed gratitude to taxpayers for their trust and cooperation, terming it essential for sustained growth.

She further acknowledged the support and guidance of the Chief Minister Khyber Pakhtunkhwa Muhammad Sohail Afridi and the Provincial Minister for Finance, Mr. Muzzammil Aslam noting that their leadership has played a key role in strengthening revenue mobilization efforts in the province.

Copyright Business Recorder, 2026

The directions were issued on a complaint regarding non-adjustment of pending income tax refunds of previous tax years against tax liability for Tax Year 2025.According to the complaint, the taxpayer had approached the tax department well within time for adjustment of refund claims relating to Tax Years 2017, 2018, 2019, 2020 and 2023, but the matter remained unattended due to departmental delay and inaction, forcing the taxpayer to seek relief from the Ombudsman.

After examining the case, the FTO observed that refund claims for Tax Years 2017 to 2020 had not yet attained finality, as their admissibility would be determined only after implementation of the relevant appellate orders.

However, in respect of Tax Year 2023, the Ombudsman noted that the taxpayer had filed a refund application amounting to Rs44.673 million, which the department was legally required to decide within the prescribed time. Despite this statutory obligation, the department failed to dispose of the claim.

The Ombudsman further observed that when the taxpayer subsequently requested adjustment of the claimed refund against tax liability for Tax Year 2025, the department again failed to act. It was only after issuance of notices by the FTO Secretariat that the concerned tax office moved and initiated proceedings on the refund application.

In its findings, the FTO noted that while the department often demonstrates “phenomenal quickness” in adjusting refunds against tax demands raised by itself, the same legal facility is frequently denied to taxpayers despite repeated requests.

The Ombudsman held that such conduct amounted to arbitrary treatment, delay and maladministration within the meaning of the FTO Ordinance, 2000.

The FTO has, therefore, recommended that RTO Islamabad immediately dispose of the pending refund claim for Tax Year 2023 strictly in accordance with law.

The Ombudsman has also directed Member Inland Revenue (Operations) to issue instructions to all field formations that coercive recovery of tax demand should only be initiated after disposal of pending refund claims and adjustment requests. The FBR has further been directed to submit a compliance report within 60 days.

Copyright Business Recorder, 2026

To discuss the strategy and review measures for enhancing revenue from the services sector, a meeting of the PRA was presided over by Chairman of the Authority, Moazzam Iqbal Sipra. During the meeting, a detailed briefing was given to the chair on expanding the tax net and bringing additional service sectors into taxation. The chairman issued directions to ensure registration of unregistered businesses and to promote e-filing and e-payment systems on a priority basis.

According to the PRA officials, various proposals were reviewed to make the tax system more transparent and user-friendly through digitalization and automation. The meeting was further briefed on awareness campaigns aimed at promoting tax compliance among the public. It was decided to soon launch a dedicated WhatsApp number at PRA to facilitate easy and prompt redressal of taxpayers’ complaints, the officials added.

The Chairman PRA emphasized that effective monitoring, inspection and improved enforcement are essential to curb tax evasion. He reiterated that increasing revenue without placing an unnecessary burden on the business community remains a top priority of the government of Punjab. He further stated that efforts to enhance revenue through data integration with government departments will be expanded. Commissioners, assistant commissioners and enforcement officers from all districts participated in the meeting via video link.

Copyright Business Recorder, 2026

BMP Chairman and former FPCCI President, Mian Anjum Nisar, said that Pakistan’s recent fuel price hikes—ranging between 63 percent to over 75 percent in petrol and diesel—stand in sharp contrast to regional economies, where increases have remained limited to just 2 percent to 10 percent. He noted that India, Bangladesh, China, and Vietnam have adopted calibrated pricing strategies, shielding their industries through subsidies, tax adjustments, and gradual revisions, while Pakistan has imposed a disproportionately heavy burden on its economy.

“This policy divergence is not just alarming—it is economically damaging,” he said. “At a time when our exporters are already struggling with high energy costs and declining global demand, such an excessive increase in fuel prices is effectively pricing Pakistan out of international markets.”

Mian Anjum Nisar emphasized that petrol prices reaching around Rs458 per litre—driven largely by a petroleum levy exceeding Rs160 per litre—reflect a fiscal approach overly reliant on indirect taxation. While acknowledging the constraints posed by the IMF programme, he warned that excessive dependence on fuel taxes could choke economic activity rather than stabilize finances.

“Fuel is the backbone of all economic sectors—transport, manufacturing, agriculture, and services. When its cost rises sharply, the entire economic chain is disrupted,” he explained. “This is not just a price increase; it is a structural shock.”

He pointed out that logistics and transportation costs in Pakistan are already among the highest in the region. The latest fuel hikes will further inflate freight charges, increase input costs for manufacturers, and reduce profit margins across industries. Export-oriented sectors, particularly textiles and value-added segments, are likely to face significant setbacks as global buyers shift to more cost-competitive markets.

“Our regional competitors are gaining ground precisely because their governments are protecting industry from such shocks,” he said. “Bangladesh and Vietnam, for example, continue to offer stable energy pricing, enabling their exporters to secure long-term contracts at competitive rates.”

The BMP chief also expressed concern over the impact on small and medium enterprises (SMEs), which form the backbone of Pakistan’s industrial base. “Unlike large corporations, SMEs do not have the financial cushion to absorb sudden cost increases. Many will be forced to scale down operations, reduce workforce, or shut down entirely,” he warned.

In agriculture, the implications are equally serious. Diesel-powered machinery, including tractors, tube wells, and harvesters, will become significantly more expensive to operate. This, he noted, will drive up the cost of food production, contributing to inflationary pressures and exacerbating food security concerns.

Mian Anjum Nisar further highlighted the paradox of over-taxation, cautioning that higher fuel taxes may not yield the expected revenue gains. “There is a threshold beyond which increased taxation leads to reduced consumption and, ultimately, lower revenue collection. As economic activity slows, fuel demand declines, undermining the very fiscal objectives the government seeks to achieve,” he said.

He also criticized the distortionary impact of current pricing policies, particularly the cross-subsidization between petrol and diesel. “Such measures disrupt market signals and create inefficiencies. Instead of promoting rational consumption, they redistribute financial stress within an already fragile system,” he added.

On the social front, the BMP chairman warned of widespread repercussions. Fuel price increases, he said, are inherently regressive, disproportionately affecting lower and middle-income groups. The ripple effects—higher transport fares, increased food prices, and rising utility costs—will erode purchasing power and heighten economic hardship.

“This is not just an economic issue; it is a social challenge,” he said. “Persistent inflation and declining real incomes can lead to public discontent and instability.”

Mian Anjum Nisar urged the government to adopt a more balanced and sustainable fiscal strategy. He called for immediate relief measures, including a reduction in the petroleum development levy (PDL), rationalization of energy tariffs, and targeted support for export-oriented sectors.

He stressed that fiscal consolidation should focus on expenditure rationalization rather than excessive revenue extraction. “There is significant room to cut non-productive government spending, reduce administrative inefficiencies, and improve fiscal discipline,” he noted.

The BMP chief also reiterated the need to broaden the tax base by bringing untaxed sectors—particularly retail and agriculture—into the formal economy. “The burden cannot continue to fall on the already documented sectors. Structural reforms in taxation are essential for long-term sustainability,” he said.

Additionally, he emphasized the importance of energy sector reforms, including reducing transmission losses, curbing theft, and improving distribution efficiency. “Without addressing these systemic issues, price hikes will only transfer inefficiencies to consumers and businesses,” he warned.

He also advocated for a phased and predictable fuel pricing mechanism to avoid sudden shocks. “Gradual adjustments, combined with targeted subsidies for vulnerable groups, can help balance fiscal needs with economic stability,” he suggested.

Copyright Business Recorder, 2026

In this regard, the Federal Board of Revenue (FBR) has issued draft amendments through which if confirmed, would mean that non-resident persons that have more than 50,000 subscribers or followers in a tax year in Pakistan or more than 12,250 subscribers / followers in a quarter on social media shall have significance economic presence in Pakistan in terms of Section 101(3B)(b). This means their income to the extent it is generated by interaction with Pakistani users shall be Pakistan source income. These draft amendments may also apply to non-resident persons with lesser followers but that have a higher reach / view count than 50,000 views per post or video in Pakistan in a tax year or more than 12,250 views in a quarter, a tax expert explained.

The FBR has made it mandatory for both resident and non-resident persons, deriving income from interaction with users in Pakistan through social media platforms, to pay quarterly advance tax and also file special income tax return.

In this connection, the FBR has issued SRO.545(i)/2026 and in case of local Pakistanis, the FBR has issued an SRO.546(I)/2026 here on Thursday.

The Federal Board of Revenue (FBR) Thursday issued special procedure for taxation of persons earning income from remunerative social media content.

The “Revenue per mille” means the revenue generated per 1000 views on the video shared on Youtube. For the purpose of this Special Procedure, it shall be taken as Rs 195 and is subject to revision from time to time, FBR added.

A tax expert clarified that the FBR assumes that a YouTuber earns about Rs. 195 for every 1,000 views on their videos. This estimate is used as a benchmark to calculate taxable income, especially if exact earnings are not available.

The rate can change in the future if the FBR updates its formula. This helps the tax authority determine how much income to include when calculating taxes on YouTube earnings.

Under the new regulations, every non-resident person deriving income from interaction with users in Pakistan through social media platforms to the extent such income constitutes Pakistan-source income.

The FBR’s rules shall apply for the purpose of section 99C of the Income Tax Ordinance. 2001 to provide special procedure for computation of income of non-resident persons earning income from remunerative social media content.

The FBR has also specified procedure for calculation of Income from remunerative Social Media Content. The minimum income of a person from remunerative social media content shall be calculated as per the prescribed formula.

The threshold for number of users shall be number of users to qualify for “Systemic and Continuous Soliciting of Business Activities or

Engaging in Interaction through Digital Means” would be exceeding 50,000 users during a tax year or twelve thousand two hundred and fifty users during a quarter.

This may include persons with more than 50,000 subscribers or followers, and persons with lesser followers / subscribers but with greater engagement count with the viewers.

Every person under this special procedure shall pay advance income tax calculated by applying the procedure given in rule -l9M and rule-19N above for one quarter and shall be payable or recoverable as the case may be.

The declaration of such income shall be made in a special part of Income Tax Return for each tax year.

Where the declaration of income is less than the amount calculated in rule -19M and rule-19N, the relevant commissioner may rectify this error omission or commission in the return and proceed to recover the amount due from the taxpayer as per the provisions of the income Tax Ordinance, 2001.

In case of local Pakistanis, the FBR has issued an SRO.546(I)/2026 here on Thursday to notify special procedure for taxation of persons earning income from remunerative social media content.

The Federal Board of Revenue (FBR) new taxation procedure will be applicable on every resident person deriving income from interaction with users in Pakistan through social media platforms.

The “Social media platform” means an internet-based service whose primary purpose is to enable users to interact with other users and share user-generated content, where the economic value of the service arises from user participation, network effects and the monetization of user engagement or user data.

Revenue per mille” means the revenue generated per 1000 views on the video shared on Youtube. For the purpose of this Special Procedure. it shall be taken as PKR 195 and is subject to revision from time to time.

According to the new regulations, the rules shall apply for the purpose of section 99C of the Income Tax Ordinance 2001 to provide special procedure for computation of income of resident persons earning income from remunerative social media content.

Every person under this special procedure shall pay advance income tax calculated by applying the procedure given in rule-l3ZK and rule-132L above for one quarter and shall be payable or recoverable, as the case may be. as per provisions of section 147 of the Income Tax Ordinance. 2001.

The declaration of such income shall be made in a special part of Income Tax Return for each tax year.

Where the declaration of Income is less than the amount calculated in rule- l3ZK and rule-132L, the relevant commissioner may rectify this error of omission or commission in the return and proceed to recover the amount due from the taxpayer as per the provisions of the Income Tax Ordinance. 2001, FBR added.

Copyright Business Recorder, 2026

According to the latest data, the Federal Board of Revenue (FBR) recorded a massive shortfall of Rs 331 billion during the first half of fiscal year 2025-26. The FBR collected Rs 6.159 trillion against a projected target of Rs 6.490 trillion. This gap was primarily driven by lower domestic sales tax and income tax receipts, with sales tax alone falling Rs 172 billion short of its goal.

Experts point out that sectors such as real estate, tobacco, pharmaceuticals, tea, and tyres continue to operate largely outside the documented framework, shifting the tax burden onto a narrow base of compliant taxpayers.

The impact is most visible in the tobacco sector, where illicit products account for more than half the market, costing the national exchequer over Rs 415 billion annually. While the government’s budget for FY26 relies on Rs 400 billion through enhanced enforcement, the weak implementation of the Track and Trace System across industries serves as a clear indicator of limited institutional resolve.

Without a shift from isolated retail checks to coordinated, nationwide enforcement at the production and distribution levels, experts warn that the shortfall could continue to widen.

Macroeconomic analyst Osama Siddiqui emphasized that a sustainable fiscal future depends on shifting policy away from repeatedly taxing the compliant, terming the Rs 330 billion shortfall a wake-up call that- technology like Track and Trace- cannot work in a vacuum.

Copyright Business Recorder, 2026

During a meeting of the Federal Ministry of Housing and Works, chaired by the PM, officials presented the ministry’s strategic roadmap, outlining efforts to overhaul the housing sector and strengthen regulatory oversight.

The officials said that reforms are being introduced to streamline the tax structure for the construction industry, a step considered crucial for attracting investment and supporting large-scale housing initiatives.

READ MORE: Govt housing scheme expected to revive economic activities in construction sector

In his remarks, the PM emphasised that expanding housing opportunities for low-income groups, promoting affordable housing projects, and incentivising private sector participation remain central to the government’s agenda.

“Practical measures must be taken to effectively provide house finance facilities to the common man,” he said, signalling a continued focus on inclusive housing policies.

Officials also briefed the PM on a plan to construct homes for low-income families through public-private partnerships.

The proposed establishment of a Real Estate Regulatory Authority was highlighted as a measure to regulate and monitor the real estate and housing sectors more effectively.

Regarding housing finance, officials noted that discussions are continuing among the Ministry of Finance, the FBR, the Securities and Exchange Commission (SECP), and provincial housing ministries, particularly on the development of a Real Estate Investment Trust to mobilise private sector investment in housing.

The meeting was attended by Federal Minister for Finance Muhammad Aurangzeb, Federal Minister for Housing and Works Riaz Pirzada, Federal Minister for Information Technology Shaza Fatima, Federal Minister for Law and Justice Azam Nazir Tarar, Federal Minister for Economic Affairs Ahad Cheema, Prime Minister’s Adviser on Inter-Provincial Coordination Rana Sanaullah, Minister of State for Finance and Railways Bilal Azhar Kiani, along with other senior officials.

Copyright Business Recorder, 2026

The FBR on Monday filed three separate petitions seeking leave to appeal against the Peshawar High Court’s judgment dated December 18, 2025. The petitions were filed through advocate Hafiz Ehsaan Ahmad Khokhar under Article 185 of the Constitution.

The petitions raise substantial questions regarding the scope of constitutional jurisdiction under Article 199 of the Constitution.

The departmental authorities, acting upon credible information regarding possible evasion of federal excise duty, obtained search warrants from a court of competent jurisdiction and conducted a search operation against three cigarette manufacturing units at Nowshera Road, Mardan, on 12th December 2025.

The search was carried out under the supervision of an Assistant Commissioner, which resulted in the recovery of approximately 2.75 million kilograms of un-manufactured tobacco from five godowns located at Sang-e-Mar Mar on the Swabi-Mardan Road, opposite Samson GLT.

The competent officer in view of the un-reconciled and undeclared stock, and the absence of duty-paid documentation, formed a “reason to believe” within the contemplation of Rule 28 A (6) of the Federal Excise Rules, 2005 that the goods were clandestinely stocked and that the GLT machinery and cigarette manufacturing units were being used in contravention of the provisions of the Act and the Rules.

Consequently, the GLT unit, as well as, the cigarette manufacturing premises were sealed in exercise of statutory authority under Rule 28 A (6) read with Sections 26 and 27 of the Federal Excise Act, 2005. The department subsequently issued a show cause notice under Section 24 read with Section 33 of the Act, thereby initiating adjudicatory proceedings in accordance with the statutory procedure prescribed for the determination of liability and enforcement of excise duty.

The respondent companies challenged the regional tax action/ departmental action before the Peshawar High Court by filing different constitutional petitions under Article 199 of the Constitution. The High Court, after hearing the parties, allowed the petitions and declared the sealing of the manufacturing units illegal while observing that the revenue authorities could proceed with inquiry and assessment in accordance with law if violations were established.

The department contended that the impugned judgment is contrary to the well-settled doctrine of exhaustion of remedies, consistently affirmed by the Supreme Court, including the reported case of 2022 SCMR 92, which holds that constitutional jurisdiction cannot ordinarily be invoked to circumvent the remedies provided under a special fiscal statute.

The petition further submits that the High Court interfered at a premature stage of the proceedings, even though only a show-cause notice had been issued and the adjudication process under Section 33 of the Federal Excise Act had not yet culminated in any final determination of liability. The department argues that the issuance of a show cause notice merely initiates adjudicatory proceedings and does not constitute a final adverse order amenable to challenge under Article 199 of the Constitution.

The FBR has also challenged the High Court’s treatment of the statutory expression “reason to believe” contained in Rule 28A (6) of the Federal Excise Rules. The petition asserts that the formation of such a belief is to be assessed based on objective material available to the competent officer at the time of action, and not on conclusively established proof that may emerge only after completion of adjudication proceedings.

Hafiz Ehsaan submitted that recovery of a large quantity of un-reconciled tobacco stock and the failure to produce duty-paid documents constituted sufficient material to justify regulatory action under the statute.

He further argued that the High Court erred in substituting its own subjective satisfaction for the statutory satisfaction of the competent authority, thereby intruding into the domain of administrative discretion. He maintained that the sealing of the GLT unit and the cigarette manufacturing premises under Rule 28A (6) read with Sections 26 and 27 of the Federal Excise Act constitutes a preventive and regulatory measure aimed at safeguarding federal revenue, rather than a punitive action.

Copyright Business Recorder, 2026

During a high-level meeting at CM House Thursday, the Chief Minister directed the SRB to intensify efforts to broaden the tax base, take decisive action against tax evasion, and accelerate digital reforms. He emphasised that these measures are crucial to consolidating recent revenue gains and enhancing institutional transparency.

The SRB’s total collection for February 2026 stood at Rs 34.86 billion, a significant increase from the Rs 24.664 billion gathered in the corresponding month of 2025. Cumulative revenue for the current fiscal year, from July to February, reached Rs 225.653 billion, marking a 24 per cent rise over the Rs 182.605 billion collected during the same period last year.

SRB Chairman Wasif Memon informed the meeting that the authority recorded historic collections of Rs 306.6 billion in the 2024-25 fiscal year, with Sindh Sales Tax on Services (SST) contributing Rs 284.4 billion. This represented a 29.5 per cent increase from the previous year’s Rs 237 billion. Furthermore, June 2025 saw the highest-ever monthly collection of over Rs 40.5 billion in SRB”s 15-year history.

The briefing identified ports, airport and terminal operators as the largest revenue contributors, generating Rs 40.2 billion. Other key sectors included telecommunication with Rs 24.2 billion, the banking sector with Rs 20.34 billion, franchise services with Rs 17.53 billion, and insurance with Rs 14.56 billion. The top ten sectors collectively contributed Rs 155.6 billion to the provincial exchequer.

Exceptional growth was noted in several emerging sectors. The Funds and Asset Management sector recorded an astounding 162 per cent growth, generating Rs 5.76 billion and entering the list of top contributors for the first time. Other high-growth areas included goods transportation (50 per cent), software and IT consultancy (49 per cent), and technical and engineering consultancy (44 per cent).

Regional offices also demonstrated strong results, with the Hyderabad Commissionerate collecting Rs 20.9 billion (38 per cent growth) and the Sukkur and Larkana Commissionerates jointly gathering Rs 11 billion (41 per cent growth). The Chairman attributed this success to improved monitoring, taxpayer facilitation, and enhanced digital utilisation.

Digitalisation measures have significantly improved compliance, with Rs 48.42 billion collected through withholding agents in FY 2024-25. The automation of tax deductions through government accounting systems has enhanced transparency. Collections for the Sindh Workers Welfare Fund also grew by 55 per cent to Rs 22.25 billion in the same period.

The Chief Minister was also briefed on major institutional reforms, including the establishment of a dedicated Intelligence, Investigation and Prosecution Wing to combat tax fraud, making SRB the first provincial authority in Pakistan with such a unit.

Appreciating the SRB’s performance, Syed Murad Ali Shah stated, “The growth in provincial revenue reflects improved governance, transparency and institutional reforms. Crossing the Rs 300 billion mark is a significant achievement and shows the potential of the services sector in strengthening provincial finances.”

The decision was taken during a meeting chaired by PRA Chairman Moazzam Iqbal Sipra. Officials agreed that the campaign will begin in April, initially targeting educational institutions across Punjab.

Under the initiative, students will be encouraged to serve as PRA ambassadors to help spread awareness about tax responsibilities and civic duties. Citizens will also be able to verify receipts issued by hotels, restaurants, gyms and aesthetic clinics through the PRA mobile application and a dedicated WhatsApp number.

Authorities said the move is intended to improve transparency and discourage the issuance of fake receipts by businesses. In the first phase, the campaign will be jointly launched by the School Education Department and the PRA in schools throughout the province. A PRA spokesperson said strict action would be taken against businesses found issuing fake receipts. As part of enforcement measures, up to 20 percent of the recovered tax amount will be awarded to individuals who report violations. The spokesperson added that the Whistleblower Act will come into force immediately after government approval. Officials believe the introduction of financial incentives will encourage more citizens to report violations and strengthen tax compliance. The initiative is aimed at fostering a stronger tax culture in Punjab and encouraging greater public participation in ensuring transparency and accountability.

Copyright Business Recorder, 2026

According to a statement released on Saturday, the Securities and Exchange Commission of Pakistan (SECP) has been continuously engaging with provincial governments to strengthen the legal framework and ensure effective enforcement of mandatory motor third-party insurance across the country.

Through this amendment to the Provincial Motor Vehicles Ordinance, 1965, a new Section 67-H has been introduced, requiring third-party liability insurance for motor vehicles. Under the revised framework, no vehicle will be registered, transferred, or allowed to pay annual token tax without a valid insurance policy covering third-party risks.

Third-party motor insurance is a basic and affordable policy that covers legal liabilities for damage to property, injuries, or death caused to another person in an accident.

The amendment also introduces defined compensation limits on a no-fault basis, ensuring timely financial relief to victims or their legal heirs. The compensation includes Rs700,000 in case of death and Rs500,000 for permanent disability.

With this reform, Sindh has become the first province in Pakistan to effectively enforce mandatory motor third-party liability insurance through a strengthened legal framework.

The SECP has operationalised the Motor Insurance Repository (MIR), a centralised electronic database that records motor insurance policies issued by insurers registered with the commission. The system enables digital verification of insurance policies and helps ensure compliance with minimum legal requirements at the time of vehicle registration.

SECP is also working with the Punjab Provincial Transport Authority to link the vehicle route permit regime with the Motor Insurance Repository for online validation of insurance policies, further strengthening enforcement mechanisms nationwide.

The development came during a meeting between a delegation representing Pakistan’s leather and footwear industry and Federal Minister for Commerce Jam Kamal Khan, read a statement on Thursday.

During the meeting, the delegation highlighted the strong potential of Pakistan’s footwear industry to expand exports and contribute more significantly to the country’s export basket.

Industry representatives noted that Pakistan possesses substantial manufacturing capacity and skilled labour, which can support increased production for both domestic consumption and international markets.

The delegation emphasised that Pakistan’s annual footwear consumption is estimated at around 550 million pairs, while the country has an installed production capacity of nearly 700 million pairs annually, indicating significant potential for both domestic supply and export expansion. However, they noted that a considerable portion of this capacity remains underutilised due to market distortions created by the growing influx of used footwear imports.

Industry representatives informed Jam Kamal that approximately 30–40% of the domestic market is currently being met through imports of used footwear. Many of these imports, they explained, include branded shoes entering the market at extremely low declared values under the category of used clothing, which creates unfair competition for local manufacturers.

In this context, the delegation proposed the introduction of a separate HS code for used footwear, which is currently classified under the broader category of used clothing and accessories.

The delegation explained that the existing classification makes it difficult for regulators to properly track footwear imports, assess accurate valuation, and implement sector-specific regulatory measures.

During the discussion, the Joint Secretary (Tariff) of the Ministry of Commerce apprised the minister that the proposal to create a separate HS code for used footwear has been placed on the agenda of the upcoming meeting of the Tariff Policy Board.

It was further shared that, following consultations and approvals, the proposal may ultimately become part of the upcoming federal budget.

Meanwhile, responding to the delegation’s concerns, Jam Kamal acknowledged the importance of the leather and footwear sector as a high-potential export industry and reiterated the government’s commitment to supporting local manufacturing while promoting export-led growth.

The minister encouraged industry stakeholders to enhance export performance and strengthen Pakistan’s presence in international footwear markets, while also emphasising the need for locally produced footwear to remain reasonably priced and accessible in the domestic market.

The meeting also discussed broader measures to improve customs valuation practices, address regulatory challenges associated with used imports, and encourage investment in export-oriented footwear manufacturing.

According to official sources, the operation was carried out by the Excise and Taxation Office (ETO-II) Peshawar under the supervision of Excise and Taxation Officer Tausif Khan.

Special recovery teams have been constituted under the leadership of Assistant Excise and Taxation Officers Nasir Mahmood Khan and Zar Ali Khan for the recovery of outstanding property tax from major defaulters. According to the officials of the department, despite repeated notices, a number of property owners failed to clear their outstanding tax liabilities. As a result, legal action was initiated in accordance with the relevant laws and several defaulting units were sealed during operations conducted in different localities of the city.

The department has advised all property owners to ensure timely payment of their outstanding property tax dues to avoid legal action and inconvenience.

Copyright Business Recorder, 2026

According to an SRO.288(I)/2026 issued late night (Wednesday), the integrated enterprises (businesses) through Board’s online system shall provide information of their outlets, points of sale or electronic invoicing transactions. No supply shall be made by the integrated enterprises except through the integrated outlets, point of sale or electronic invoice or bill issuing machines.

The businesses required to be integrated with the FBR’s system included restaurants, hostels, motels, guest houses, marriage halls, marquees, clubs including race clubs, inter-city travel by road, courier services and cargo services, services provided for personal care by beauty parlours, clinics and slimming clinics, massage centres, pedicure centres, all medical service providers including dentists, physiotherapists, plastic surgeons, hair implant surgeons and veterinary doctors, pathological laboratories. Medical diagnostic laboratories including X Rays, CT Scan. M.R lmagingetc, private hospitals or medical care centres providing medical consultation, hospitalization or other ancillary services, health clubs, gyms physical fitness centres, swimming pools and multipurpose clubs such as Lahore gymkhana, Islamabad club, Chenab Club, Karachi Gymkhana, Royal Palm Lahore, Polo Club etc operated by any civilian/ non-civilian administration, photographers, videographers and event managers, accountants, retailers including manufacturer cum-retailer, wholesaler-cum retailers, importer-cum-retailer or such other person who combines the activity of retail sale with another business activity and foreign exchange dealers/exchange companies, private schools, colleges, universities, professional institute/vocational training centres.

Copyright Business Recorder, 2026

In a letter sent to chairman FBR, the KTBA called on the FBR to exercise restraint in enforcement proceedings until a detailed judgement is issued by the Federal Constitutional Court (FCC).

On January 27, 2026, the FCC issued a short order disposing of multiple appeals and petitions filed by taxpayers who had challenged the levy of Super Tax under Sections 4B and 4C of the Ordinance.

In the wake of this order, tax authorities intensified their efforts to recover outstanding Super Tax dues from affected taxpayers. However, the KTBA argued that the short order alone did not provide sufficient legal clarity for full enforcement. The bar urged that recovery of outstanding balances should be deferred until the detailed judgement, as connected and consequential legal matters could only be properly evaluated thereafter.

The KTBA letter said that recovery proceedings are reportedly being initiated in certain cases without providing the mandatory thirty (30) days’ notice period prescribed under Section 137 of the Income Tax Ordinance, requesting the FBR to issue immediate directives halting such unlawful recovery actions and ensuring strict compliance with statutory provisions.

Despite intensified recovery efforts, taxpayers are being denied the right to adjust their Super Tax liability against excess tax payments and pending refund claims already filed and awaiting verification, the letter said. KTBA urged the FBR to direct field formations to allow such adjustments and to expedite refund verification and processing without undue delay.

Copyright Business Recorder, 2026

He made these remarks while presiding over a high-level meeting.

The meeting was attended by a high-profile delegation of parliamentarians and industrialists, including: Haji Ghulam Ali, former governor KP, Senator Hidayatullah and Senator Dilawar Khan, James Iqbal, Member of National Assembly, Ghazanfar Bilour, former president FPCCI, Karim Aziz Malik, chairman FPCCI Capital Office, Malik Sohail Hussain, Chairman Coordination, Capital Office, Shoaib Khan, Group Leader, Malakand Chamber, Lali Shah Group Leader, Bajaur Chamber, Noor Alam Badshah, President Lower Dir Chamber, Iftikhar Khan, Chief Executive, Taj Group.

During the session, traders and industrialists from the tribal regions briefed the President on the severe economic crisis, business closures, and the challenges posed by various taxes and the Regional Tax Office (RTO) Peshawar. They urged the FPCCI and the parliamentarians to play a decisive role in mitigating these hardships.

Responding to the concerns, Atif Ikram Sheikh emphasised that FPCCI is fully aware of the deteriorating economic situation in FATA and PATA.

“Tax exemptions and incentives for FATA and PATA are not mere relief; they are a fundamental right of the large population living there. Due to the law and order history and lack of infrastructure, these industries need special support to compete with the rest of the country,” he stated.

Copyright Business Recorder, 2026

Addressing a well-attended gathering at the Islamabad Chamber of Commerce and Industry (ICCI), he highlighted the proactive role of the FTO in providing relief to aggrieved taxpayers and addressing maladministration within the taxation system since its inception.

Speaking to representatives of trade and industry, former ICCI Presidents, Executive Committee members, and senior office-bearers including Senior Vice President Tahir Ayub and Vice President Irfan Chaudhry, the FTO made it clear that there would be no compromise on the respect and honour of taxpayers. He stated that taxpayers are the backbone of the government system, as the state runs on their contributions. He emphasized that abolishing the culture of harassment of tax filers is among his top priorities and declared zero tolerance for any form of malpractice, mistreatment, or harassment.

Zafar-ul-Haq Hijazi announced the establishment of three Advisory Committees at the headquarters level: the Income Tax Advisory Committee, Sales and Excise Tax Advisory Committee, and Customs Advisory Committee. These committees will include the President of ICCI, the President of Rawalpindi Chamber of Commerce and Industry, the President of the Tax Bar, along with other relevant stakeholders. The committees will deliberate separately and advise the FTO on improving service delivery. Similar regional committees will also be formed to ensure effective coordination and facilitation at the local level.

He stated that the primary purpose of his visit to ICCI was to bridge the gap between taxpayers and the FTO and to assure the business community that the institution stands firmly behind them for justice. He urged the attendees to bring their issues directly to his notice, assuring them that they would witness a visible difference in the resolution of their complaints.

Almas Ali Jovindah, Advisor (Legal) to the FTO, encouraged the business community to act as ambassadors of the institution, emphasizing that the FTO provides free-of-cost and prompt relief to complainants against the Federal Board of Revenue (FBR). He informed that the FTO is dispensing justice within 60 days and stressed the need to strengthen this partnership for the larger interest of the community.

ICCI President Sardar Tahir Mehmood, while highlighting issues faced by the business community, including those relating to the real estate sector, acknowledged that tax collection is fundamental to the functioning of the State. He appreciated the business community for fulfilling its national responsibility but underscored that a fair, just, efficient, and simple taxation system is essential to build confidence among taxpayers. He noted that the FTO has been playing an effective role in resolving business-related complaints, which has significantly enhanced the confidence of the business community in the institution.

Chairman ICCI Founder Group Tariq Sadiq termed the appointment of Zafar-ul-Haq Hijazi as a “cool breeze” for the business community. Chairman ICCI Standing Committee Mian Mohammad Ramazan moderated the session.

Former Presidents Mian Shaukat Masood, Shakeel Munir, and other participants raised questions regarding their departmental issues. Among those present were former President Khalid Javaid, Mohammad Ejaz Abbasi, Executive Members Abdul Rehman Siddiqui, Sanaullah Khan, Zulqurnain Abbasi, Ishaq Sial, Mirza Mohammad Ali, ICCI senior member Isran Mishwani.

Copyright Business Recorder, 2026

A high-level meeting on tax recovery was held under the chairmanship of PRA Chairman to review enforcement measures and revenue performance. During the meeting, all commissioners and enforcement officers were directed to complete assigned registration and tax collection targets within the next two days. The chairman said that new enforcement officers will be deployed across various districts and assigned to newly established enforcement units to strengthen field operations.

It was highlighted in the meeting that amendments to the PRA laws and the ongoing reforms programme has resulted in a record increase in tax collection, reflecting improved compliance and enforcement efficiency. The chairman also issued instructions to fully activate enforcement teams to ensure effective implementation of the Electronic Invoice Monitoring System (EIMS). The performance of commissioner Gujranwala was appreciated for timely achievement of prescribed targets. The meeting was attended by divisional commissioners and enforcement officers through video link.

Copyright Business Recorder, 2026

The complainant, represented by Miss. Riffat Naeem advocate High Court, had been deregistered under Section 21(1) of the Sales Tax Act, 1990 by the Commissioner-IR, Zone-I, RTO-II Karachi on August 18, 2015. However, the deregistration was not updated online, resulting in repeated notices for non-filing of returns.

On referral of the matter by the FTO, the Commissioner uploaded the deregistration application on January 14, 2026, thereby resolving the grievance. The Ombudsman, M. Zafar ul Haq Hijazi, subsequently closed the case, noting that the intervention had ensured redressal of the taxpayer’s complaint.

Copyright Business Recorder, 2026

According to the FBR’s brief submitted to the Senate Standing Committee on Finance, it wishes to clarify that the purpose of the recent text messages sent to filers was to enhance taxpayer awareness and compliance through behaviorally informed nudges.

The information used in these messages pertains solely to the taxpayer’s own financial profile and is shared exclusively with the individual to whom the data belongs. No third party is ever involved in the transmission of such messages, and all communications are made through secure official channels.

READ MORE: Super Tax to be recovered in instalments: FBR announces major relief for corporate sector

It is further submitted that FBR, under the Income Tax Ordinance, 2001, is legally empowered to obtain third-party data from various institutions for the purpose of broadening the tax base and improving compliance. Specifically:

a. Section 165A of the Ordinance authorizes every banking company to furnish prescribed information to the Board, including particulars of deposits, withdrawals, and payments above defined thresholds.

b. Section 175A provides for real-time access to information and databases from designated agencies such as NADRA, FIA, SBP, provincial land authorities, electricity and gas utilities, and others, subject to confidentiality under Section 216, to be used strictly for tax purposes.

The FBR stated that all such data are held within FBR’s secure systems and used solely for the purpose of risk-based analysis and taxpayer facilitation, in strict conformity with the provisions of the law and the rules of data protection.

The FBR remains fully cognizant of citizens’ right to financial privacy and ensures the highest standards of data security and confidentiality.

The messages in question therefore do not constitute a breach of financial privacy; rather, they are part of an evidence-based approach to strengthen voluntary compliance and ensure that taxpayers are aware of their own declared and third-party-reported financial information. The FBR remains committed to cooperating with all oversight forums of Parliament and to upholding transparency, data protection, and respect for taxpayers’ rights, the FBR added.

Copyright Business Recorder, 2026

The decision of the ADRC was not implemented after senior tax officials reportedly disregarded and nullified a concluded ADRC decision issued by its members, including a former judge of the Lahore High Court.

The committee was dissolved after the ADRC announced a favourable decision for the taxpayer. The matter reached the Federal Tax Ombudsman (FTO) when a long-standing compliant taxpayer filed a complaint accusing officers of the FBR/CTO Islamabad of deliberate manipulation and misrepresentation in the ADRC matter as a tax dispute decision that had already been finalized in the taxpayer’s favour.

READ MORE: FBR’s refusal to disclose ADRC info raises questions

After reviewing the complaint, FTO Zafar Ul Haq Hijazi has ordered a formal investigation into allegations of systematic maladministration of justice, abuse of authority, and illegal dissolution of ADRC committees after they had completed their mandate.

When contacted tax lawyer Waheed Shahzad Butt who is representing the taxpayer told Business Recorder that the ADRC constituted under the Sales Tax Act on the directions of the Supreme Court of Pakistan, heard the tax dispute, completed proceedings, and dictated and announced its decision in the presence of officials of CTO Islamabad but no action has been taken by the FBR/CTO.

Two ADRC members, including the ADRC Chairman, former Judge of LHC, subsequently issued a written order, discharging the disputed tax liability of the company.

However, three weeks after the decision, the Secretary (STO) issued letters, asserting contrary to facts that the ADRCs had “failed to decide the dispute” and purported to dissolve the committees.

The complaint terms this move a “blatant and fraudulent attempt to nullify a lawful ADRC decision that had already been rendered.”

The complaint alleges that FBR officials engaged in colourable exercise of authority to overturn an unfavourable decision.

Mis-representation of facts to dissolve ADRCs post-decision, this is also a violation of Supreme Court directives encouraging out-of-court tax dispute resolution.

FTO has taken cognizance of these allegations and is set to probe whether FBR officials engaged in a premeditated strategy to sabotage ADRC outcomes that do not favour the revenue authorities. Calling the matter a “tip of the iceberg,” Waheed Butt warns that repeated administrative interference in ADRC functions will render the mechanism meaningless and erode taxpayer confidence in the rule of law.

The FTO’s investigation is expected to set a precedent for how administrative overreach and manipulation of statutory tax dispute forums are handled in Pakistan. Case may become a benchmark for restoring taxpayer confidence in ADR mechanisms and ensuring accountability of tax officials alleged to have acted in excess of their lawful authority, Waheed added.

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APTMA Chairman Kamran Arshad said that the industry, especially the export-oriented textile industry, has been facing serious liquidity issues since the last several months due to a slowdown in export orders and an overall poor business environment and are not in a position to make massive tax payments in one go.

He further said that the payment of super tax in one tranche would not only disturb the day-to-day business activities of the ailing textile industry but also lead to overall deterioration of the national economy.

READ MORE: ‘Textile exporters being squeezed by regulatory burdens, energy costs’: APTMA

Arshad said that demanding payment of Super Tax in a single tranche is neither practical nor workable as the industry is grappling with an acute liquidity crunch due the high cost of doing business, including high energy prices, double-digit interest rates, excessive taxation, and large-scale import of raw material and intermediate inputs displacing domestic upstream segments.

He further said that the immediate demand of payment of Super Tax in hundreds of billions of rupees would not only drain working capital but would also upset cash flows and make it difficult for most business to meet day to day business obligations including payment of salaries, utility bills and other financial commitments.

APTMA Chairman urged the FBR that in the best interest of the economy and industry to adjust super tax liabilities against long-pending income tax, sales tax and other refund claims like TUF and DLTL, and the remaining liability should be converted into easy business-friendly instalments, so that the taxpayers may meet their super tax liabilities in a reasonable period without negatively impacting their business operations. He also highlighted that computation of Super Tax under Section 4C in respect of exporters is required to be based on imputable income as they remained subject to the Final Tax Regime (FTR) up to Tax Year 2024.

Imputable income for the purpose of Section 4C for exporters should be worked out by reverse calculation of income corresponding to the tax already paid under FTR, so as to arrive at an equivalent tax liability under the Normal Tax Regime. In view of the widespread implications for the export-oriented textile sector, FBR needs to sit with APTMA and other stakeholders to work out details about imputable income for generic clarification on the application of Super Tax under Section 4C in order to save exporters from different interpretations on imputable income. He reiterated that if the FBR does not provide relief to the industry in paying the Super Tax liability in a workable manner, it will undoubtedly lead to large-scale closure of businesses including SMEs and export-oriented textile mills which are the source much needed foreign exchange for the country.

This would also have a further negative impact on the economy by shrinking the tax base instead of expanding it, and lead to unemployment of hundreds of thousands of workers, he concluded.

Copyright Business Recorder, 2026

According to a notification issued by the FBR on Monday, disciplinary proceedings were initiated against Khurram Azam, MIS Officer (BS-16), Corporate Tax Office, Karachi, on the charges of “Inefficiency” and “Misconduct” vide Charge Sheet/ Statement of Allegations under Civil Servants (Efficiency and Discipline) Rules, 2020.

The notification said that the charge of non-compliance of the order of the competent authority to execute a warrant of arrest along with the Investigating Officer, in pursuance of the court’s order, stands established.

Inquiry Officer recommended imposition of a minor penalty of “Censure” upon the accused official.In pursuance of a court’s order and order of constituting the executing team was served upon him through his WhatsApp. Khurram had seen the order but did not comply, and he submitted on 12.01.2026.

The Departmental Representative (DR) informed that the accused officer was included in a team of officers/ staff for executing a Warrant of Arrest in pursuance of a court’s order, and the order of constituting the executing team was served upon him through his WhatsApp. Khurram had seen the order but did not comply, due to which the court’s order could not be implemented immediately.

The accused officer admitted the receipt of the order for executing the warrant of arrest through WhatsApp at the eleventh hour but he did not comply, stating that the assignment was neither included in his Job Description (JD) nor was he able to accompany the team from Karachi to Hyderabad due to his health issues.

Therefore, Member (Admn/HR), being “Authority” in instant case imposed minor penalty of “Censure” upon Khurram Azam, MIS Officer (BS-16), Corporate Tax Office, Karachi under Rule 4(2)(a) read with Rule 16(7)(b) of Civil Servants (Efficiency and Discipline) Rules, 2020.

Copyright Business Recorder, 2026

According to the PRA authorities, in Lahore, records of five well-known coffee shops located in upscale areas were checked. During the inspection, serious irregularities and manipulation in Point of Sale (POS) records were detected, resulting in the imposition of fines amounting to Rs. 7 million.

The actions were taken due to failure to comply with previous directives and after confirmation of tampering in POS data, the authorities said.In Rawalpindi, builders’ offices were sealed during the operation for non-payment of sales tax. Furthermore, notices were issued to 25 outlets for not depositing taxes collected from consumers into the national exchequer.

The authorities reiterated that non-payment of duly levied taxes on the provision of services is a punishable offence under the law. Consumers are urged to always obtain an e-bill after making payment.

Copyright Business Recorder, 2026

Scores of data centres have been built in India in recent years, but lawyers told Reuters that foreign companies had been concerned that New Delhi could in future impose taxes on their global income for using a data centre located in the country.

Those concerns were set to rest by Finance Minister Nirmala Sitharaman in her 2026-27 budget speech, where she said India will “provide (a) tax holiday till 2047 to any foreign companies that provide cloud services to their customers globally, by using data centre services from India.”

READ MORE: India hands Apple a win by letting foreign firms fund equipment without tax risk

Vaibhav Gupta, partner at tax firm Dhruva Advisors, said: “This announcement helps in bringing clarity to foreign companies and lends stability in (their) tax position in India till 2047,” noting foreign companies would no longer need to worry about potential taxes on their global income on the basis they use a data centre in India.

Google said in October it will invest $15 billion in an AI data centre project in Andhra Pradesh state, while Microsoft and Amazon have poured billions into data centres in India. Indian conglomerates like Adani and Reliance are also investing.

Amazon, Microsoft and Google did not immediately respond to requests for comment on the government’s tax measure.

“Data centres will be a major strength for India through which we can provide new services to the world,” IT minister Ashwini Vaishnav told reporters.

In this regard, the FBR has issued instructions to the Chief Commissioners Inland Revenue of the field formations here on Wednesday.

Copyright Business Recorder, 2026

According to the Federal Board of Revenue (FBR) officials, total amount in cases related to Sections 4b & 4c is Rs310 billion, and Rs227 billion are recoverable in cases pertaining to Section 4c.

After hearing the arguments of the counsel of taxpayers from Karachi, Makhdoom Ali Khan, a three-judge FCC bench, headed by Chief Justice Amin-ud-Din Khan and comprising Justice Syed Hasan Azhar Rizvi and Justice Arshad Hussain Shah reserved the judgment and at 2 O’clock announced a short order. The detailed judgment would be announced later on. The bench accepted all the contentions of the FBR counsels.

The Commissioners Inland Revenue from Lahore, Karachi, Peshawar and Islamabad had challenged the judgments of Sindh, Lahore and Islamabad High Courts regarding levy of Sections 4b & 4c (Super Tax), inserted in ITO, 2001 through Finance Act 2022-23. Total 1993 cases were filed against Section 4C, while 284 petitions/ appeals were submitted before the FCC.

The FCC declared that the Parliament has exclusive authority to determine taxation under Sections 4(b) and 4(c) and that courts’ role is limited to interpretation.

It set aside the High Courts’ judgments striking down or reading down Section 4C. It held that courts cannot re-determine tax slabs, rates, thresholds, or fiscal policy, and that the High Courts committed judicial overreach, violating the doctrine of separation of powers. All appeals filed by the Secretary, FBR, and Commissioner Inland Revenue were confirmed as maintainable.

The Court rejected the appeals filed by taxpayers against the judgments of High Courts relating to Section 4b. It held that Section 4b would be applicable from 2015 and Section 4c from 2022 when they were respectively enacted.

The FCC declared that Section 4 (c) does not amount to double taxation, and there is no retrospectivity or past and closed transactions. The Court further stated that equity, fairness, or rationality of tax do not provide grounds for judicial interference.

Super taxes are valid, with specific exclusions for Benevolent/ Provident Funds. The Court said in order to seek exemption under 4C the Benevolent/Provident Funds have to present the exemption certificates to the Commissioners.

The short order modified the IHC judgment on oil companies’ cases, saying that the Super Tax be determined by the Commissioners after assessing each case as per protections of Petroleum Concession Agreements and Regulations of Mines & Oilfields & Mineral Development (Government Control) Act, 1948.

It is said that revenue authorities can independently file appeals without consultation.

Dr Shah Nawaz, counsel of the FBR, had contended before the bench that Section 4C of ITO itself empowers the Commissioner-IR to recover tax and all other enabling provisions to recover tax are also empowering the Commissioner-IR to proceed and collect/ recover tax; as such, he is empowered to defend any challenge to law.

On the issue of retrospectivity of 4C, Dr Shah Nawaz stated that Section 4C is not retrospective in operation. In fact, income tax is collected at the end of a financial year, and the applicable law is the law in force on the 1st day of the new financial year; i.e., 1st July. This principle is reiterated in many judgments; i.e., Elahi Cotton; Shahnawaz Pvt. Ltd; and Commissioner of Income Tax North Zone, West Pakistan verus Wazirunnisa Begum. He stated that all the three judgments establish that the applicable law is the law as it stands on the 1st day of July; therefore, any other interpretation would be against the settled principles of income taxation.

Accepting all submissions by the Secretary, Revenue Division, Hafiz Ahsaan Ahmad Khokhar, the FCC allowed the appeals, set aside the High Court judgments relating to the imposition of Section 4(c), and reaffirmed that the determination of taxation is Parliament’s prerogative, with courts exercising only a limited interpretative role.

The judgment clarified the limits of judicial review, strengthened parliamentary supremacy, and established a binding precedent for future taxation disputes. It declared that reading down by High Courts is constitutionally invalid, as it rewrites Parliament’s fiscal policy.

Asma Hamid, the lead counsel of the FBR, during her arguments had contended that a validly enacted tax can affect past transactions at any time. She submitted that the State has the sovereign power to tax; this power conferred on a sovereign legislature carries with authority to enact a law either prospectively or retrospectively, unless there can be found in the Constitution itself a limitation on that power.

She had also submitted that the Constitutionality of a tax is tested on 1) whether it is passed by the competent legislature, or 2) whether it is confiscatory or 3) whether it is discriminatory. Fairness alone is not a good standalone standard – it’s too vague. But fairness as embedded in arbitrariness/ equality/ confiscation tests is workable and consistent with Constitutional design. In practice, courts in both India and Pakistan apply a deferential version of fairness. They uphold almost all taxes, strike down only the ones that are plainly confiscatory, discriminatory, or irrational.

Section 4B inserted in the Income Tax Ordinance, 2001 through the Finance Act, 2015 during the PML-N government had introduced Super Tax on rich individuals, association of persons and companies earning income above Rs500 million in tax year 2015 at rate of 4 percent of income of banking companies and 3 percent on other categories for rehabilitation of temporarily displaced persons through Finance Bill (2015-16).

The government inserted Section 4C in the Income Tax Ordinance through Finance Act 2022 to charge the super tax from 13 specific sectors that according to it made windfall gains, taking their total income tax rate to 39 percent. The government had imposed the super tax on banks, cement, iron and steel, sugar, oil and gas, fertilisers, LNG terminals, textile, automobile, cigarettes, beverages, chemicals, and airlines.

The super tax under Section 4C was imposed on profits of wealthy corporations whose earnings exceeded Rs150 million, to ease the impact of the rising inflation on the poor. Several companies then approached all the provincial High Courts and the Islamabad High Court, challenging the super tax.

A five-judge Constitutional Bench of the Supreme Court, headed by Justice Amin-ud-Din Khan, on October 24, 2025 had adjourned the hearing. However, after the enactment of 27th Amendment when the FCC was established the Super Tax appeals were transferred to the FCC along with other petitions filed under erstwhile Article 184(3) of the Constitution.

Copyright Business Recorder, 2026

A three-judge bench of the Federal Constitutional Court, headed by Chief Justice Amin-ud-Din Khan on Monday heard the FBR appeals against the judgments of Sindh, Lahore and Islamabad High Courts regarding levy of Section 4C (Super Tax), inserted in the Income Tax Ordinance (ITO), 2001 through Finance Act 2022-23.

The FBR counsels – Asma Hamid and Hafiz Ahsaan Ahmed Khokhar – and Additional Attorney General for Pakistan Aamir Rehman have completed their arguments. It is expected that the bench after hearing the arguments of the lawyer of the taxpayers from Karachi may reserve judgment today (27th January).

At the conclusion of proceedings, Advocate Saad Hashmi submitted before the bench that Makhdoom Ali Khan also likes to make submissions, and requested the Court to grant him sometime to rebut the contentions of the department’s lawyers. Justice Amin said they have already heard Makhdom, and asked Hashmi to tell Makhdoom to file a written submission. When Hashmi insisted, the bench then agreed to give 15 minutes to Makhdom to make oral submission on Tuesday.

Hafiz Ahsaan Ahmad Khokhar, appearing on behalf of the Secretary Revenue Division, Federation of Pakistan, and the Federal Board of Revenue (FBR), presented comprehensive constitutional arguments regarding the imposition of Section 4-C. He submissions in T.C. No. 1031/2025 along with 225 connected matters, including 71 intra-court appeals, all transferred to the Constitutional Bench under Article 186-A of the Constitution, and now being heard following the Twenty-Seventh Constitutional Amendment.

Khokhar maintained that Super Tax is a tax on income, not a fee or cess, and therefore fully within legislative competence. He argued that multiple fiscal levies on the same subject are constitutionally permissible where each is enacted under valid statutory authority. He submitted that Super Tax is expressly included within the definition of ‘tax’, making it an additional charge on high-income earners, akin to surcharge or advance tax, and not a parallel or independent impost.

Khokhar opposed taxpayers’ objections on the maintainability of the appeals, saying under Article 99 of the Constitution and the Rules of Business, 1973, taxation and fiscal litigation fall within the exclusive domain of the Revenue Division and FBR, and revenue litigation is expressly excluded from mandatory consultation with the Ministry of Law and Justice or the Attorney General’s Office. Acts by Commissioners Inland Revenue, he added, are acts of the Federation itself, enjoying a strong presumption of legality. He further submitted that the federation and the FBR lawfully filed appeals against the Islamabad High Court judgments on Super Tax (4C), raising substantial constitutional and fiscal questions.

Justice Syed Hasan Azhar Rizvi questioned whether any power was delegated to Commissioner-Inland Revenue to filed petition before the High Court and the Supreme Court?

The lawyer argued that by Article 186-A and the 27th Amendment, the cases were automatically transferred to the Federal Constitutional Court, requiring no fresh authorization. He submitted that under Rule 14-A read with Entry 35 of Schedule II of the Rules of Business, 1973, the Revenue Division and its attached department, the Federal Board of Revenue, hold exclusive responsibility for the administration, enforcement, and protection of federal taxes and revenues, which necessarily includes the power to initiate, prosecute, defend, and pursue litigation arising from fiscal statutes; without such litigation authority, the statutory allocation itself would be rendered ineffective.

Criticiwing the High Courts’ judgments, the counsel submitted that they failed to adhere to the settled principles governing the interpretation of the vires of law. The constitutional test for judicial review of legislation, he argued, is limited to examining: (i) whether Parliament possessed legislative competence, and (ii) whether the enactment transgresses any express constitutional prohibition.

Khokhar emphasised that judicial review cannot extend to reassessing the wisdom, necessity, or fairness of fiscal measures. He added that the doctrine of “reading down” is meant only to preserve constitutionality, not to rewrite, reconstruct, or substitute the language of Parliament. By overstepping into fiscal policy— an area constitutionally entrusted to the Legislature and Executive— the High Courts, he contended, transgressed the separation of powers and displaced the will of the people as expressed through their elected representatives.

He further stressed that financial enactments occupy a distinct constitutional footing, being the primary instrument through which the State mobilises resources and frames economic policy. Fiscal statutes involve complex economic assessments, distributive choices, and revenue exigencies, requiring judicial restraint and deference to legislative wisdom, as courts are institutionally unsuited to evaluate macroeconomic policy.

Rejecting the double taxation argument, he submitted that Section 4-C operates as a distinct charging provision “in addition” to normal income tax under Section 4, imposing an additional fiscal burden rather than re-taxing the same income. He clarified that a “Special Tax Year” refers to self-contained or year-specific fiscal regimes, which do not limit Parliament’s authority to levy Super Tax within the ordinary tax year.

Addressing reading down, past and closed transactions, and retrospectivity, the counsel emphasised that the levy of Super Tax under the Finance Act, 2022 was prospective; lawfully applicable to Tax Year 2022, as no vested right accrues until the return filing date under Sections 114 and 120 of the Ordinance. Fiscal statutes, unlike criminal laws, may validly operate retrospectively to meet revenue exigencies.

Khokhar, concluding his arguments, asserted that the High Courts’ judgments reflect judicial overreach into fiscal and policy domains, contrary to the principles of separation of powers. He prayed that the judgments be set aside, and that Section 4-C of the ITO, 2001 be upheld as intra vires the Constitution, lawful, and consistent with principles of taxation, distributive justice, and constitutional governance.

Copyright Business Recorder, 2026

In a letter addressed to the Federal Board of Revenue (FBR) Chairman, LTBA President Muhammad Asif Rana called the incident “deeply disturbing and unprecedented,” involving violence, intimidation, and abuse of authority against an Advocate of the Supreme Court of Pakistan.

The LTBA said that the lawyers are officers of the court, not subordinates of FBR/Tax functionaries. Any attempt to rule by fear, force, or personal vendetta will be met with collective institutional resistance.

The demand follows a judicial order by the Sessions Judge, Lahore, directing the registration of an FIR against the Commissioner. The court, after examining the facts, found sufficient prima facie material to proceed with criminal charges.

LTBA noted that tax practitioners are required by law to interact with revenue authorities in their professional duties.

The LTBA’s demands are unambiguous, immediate suspension of the Commissioner pending criminal proceedings, permanent withdrawal from all assessment, adjudication, and enforcement roles involving lawyers, departmental disciplinary proceedings and clear policy directive barring

FBR officers accused of violence against

lawyers from field postings.

The LTBA added that continuation in office for a senior public servant facing criminal proceedings for violence and abuse of power is “wholly untenable,” particularly in positions requiring direct interaction with advocates.

Copyright Business Recorder, 2026