LAHORE: The imposition of super tax is hit by the principle of past and closed transaction, as no tax can simultaneously be agitated against the special year as well as the normal year.
It may be noted that the special year gets completed in a calendar year in some companies against the normal year that entails from 1st of July to 30th of June.
Tax experts are of the view that the imposition of super tax is based on discrimination and thus is not applicable with additional tax rate of 10 percent against the companies in the business of airlines, automobiles, beverages, cement, chemicals, cigarette and tobacco, fertilizer, iron and steel, LNG tonal, oil marketing, oil refining, petroleum and gas exploration and production, pharmaceuticals, sugar and textiles.
The Parliament inserted Section 4C in the Ordinance through the Finance Act of 2022 which imposed a super tax on certain high-earning persons with retroactive effect for the tax year 2022 and onwards; except for the banking companies which were liable to pay super tax from the tax year 2023.
Super tax for tax year 2023: hiked rate cannot be applied with retrospective effect
Earlier, they said, the super tax was reintroduced in the Ordinance through the Finance Act, 2015, by adding section 4B (super tax for rehabilitation of Temporarily Displaced Persons) that imposed a super tax on certain persons with retroactive effect on tax year 2015.
It may be noted that the super tax is an additional tax which is typically levied on high-income individuals or corporations as a means to generate additional revenue and promote income redistribution.
The history of super tax can be traced back to various countries and different time periods. During World War-I (1914-1918), several Countries including United Kingdom, Australia and Canada introduced super taxes on wealthy individuals and corporations, imposing higher tax rates on their income and profit, with the sole purpose to finance the war efforts and cover the increased government spending.
Super taxes were also implemented, during the great depression of 1930s, when many countries faced economic crises and sought ways to address income inequality and fund social welfare program, as a measure to redistribute wealth and support government initiative.
For example, the United States introduced the Wealth Tax Act of 1935, imposing a super tax on high-income individuals. After World War II, super taxes continued to be utilized in various forms. In the United Kingdom, a super tax was introduced in1949 to address post-war economic challenges.
The tax primarily targeted high-income individuals and aimed to fund reconstruction efforts and social welfare programs.
In the Indian sub-continent, on the recommendations of the All-Indian Income Tax Committee, the government consolidated income tax and tax in addition to income tax (i.e., super tax) in the Indian Income Tax Act, 1922, which was adopted of Pakistan at the time of partition.
Copyright Business Recorder, 2023
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