Latest news with #Section4B
Express Tribune
22-05-2025
- Business
- Express Tribune
Super tax hearing adjourned
A five-member Constitutional Bench of the Supreme Court, led by Justice Aminuddin Khan, adjourned the hearing on a case concerning the imposition of super tax until Tuesday. During the hearing, counsel for a company argued that Section 4B should be aligned with the income tax law. He pointed out that a 4 per cent super tax is imposed on banking companies, even if their income is as low as Rs10. In contrast, an individual earning over Rs400 million is subjected to a 3 per cent super tax. Justice Hasan Azhar Rizvi observed that the super tax was abolished in 2002 for all companies except banking institutions.
Business Recorder
20-05-2025
- Business
- Business Recorder
Sec 4B of income tax law: SC asked to dismiss appeals of cos, big units
ISLAMABAD: The Supreme Court has been asked to dismiss appeals of the companies and big industrial entities and uphold the verdicts of the provincial high courts regarding Section 4B of the Income Tax Ordinance. A five-member SC Constitutional Bench, headed by Justice Muhammad Ali Mazhar, on Monday, heard the petitions of Islamabad High Court (IHC)'s five judges, Pakistan Tehreek-e-Insaf (PTI) founder Imran Khan, and Karachi and Lahore Bar Associations. Upon the completion of arguments of departments counsels, Justice Amin inquired from petitioners' lead counsel Makhdoom Ali Khan, whether he would like to rebut the arguments of respondents. The bench; therefore, adjourned the case until May 22. If a case is subjudice proviso of Sec 174 (1) of ITO will kick in: SC Earlier, Dr Shahnawaz argued that the levy of super tax is a separate charge under Section 4B, whereas, the tax paid under FTR is a separate charge under Section 4 read with Section 8 and Section 169. He contended that the history of income taxation and literature thereto is fraught with examples where separate taxes are incorporated in income taxation to achieve progressivity in tax burden for ensuring vertical equity. The income taxation, besides revenue collection, has other objectives also which include redistribution of income to help impoverished people of the country. The progressivity in taxation, in addition to progressive tax rates, is secured either through levy of surcharge or super tax. These levies are also imposed when there is need for additional revenue for specific purpose such as war. Dr Shahnawaz stated that the contention that super tax is violative of Article 25 of the Constitution also reflects lack of basic understanding of income tax system. He submitted that the progressivity in tax rates for achieving equity in tax system is the cardinal principle of good tax system and it could be achieved when the individuals with different levels of income are taxed differently. Thus, discrimination is mandatory for achieving equity and consequently securing a good tax system. He emphasised that super tax is not a new feature in Pakistan's income tax law. It was also part and parcel of Pakistan income tax system under repealed Income Tax Ordinance, 1979. He mentioned that many countries have been using super tax for many reasons. Currently, super tax is part of income tax system in Australia, Canada, and New Zealand, he added. Dr Shahnawaz stated it is justified to say that legislature should classify the persons on reasonable basis to achieve the purpose of good tax system. In the case of super tax, the classification is quite logical as only the super rich are required to bear this burden of helping those impoverished and displaced victims of war of terror who are our fellow citizens. He argued that the allegation that agriculture income of Rs500 million is not subjected to super tax is also irrelevant because the agriculture income, being a provincial subject, is not charged to tax under Income Tax Ordinance 2001 and we are not even aware and even doubt that any agriculturist in Pakistan has the assessed agricultural income of Rs500 million. Additional Attorney General for Pakistan (AAGP) Aamir Rehman told the court that he would file three judgments of the apex court regarding the matter, adding in light of those decisions the government can levy additional tax. Justice Amin told him to file the written submission. The case has been adjourned until May 22. Copyright Business Recorder, 2025
Business Recorder
14-05-2025
- Business
- Business Recorder
Section 4B of Income Tax Ordinance, 2001: Spent more than collection for TDPs rehabilitation: AAG
ISLAMABAD: The Additional Attorney General for Pakistan (AAG) informed that the federation has spent more than what it collected for the rehabilitation of temporary displaced persons (TDPs) under Section 4B of Income Tax Ordinance, 2001. A five-judge Constitutional Bench of the Supreme Court, headed by Justice Aminuddin Khan, on Tuesday, heard the appeals of 354 taxpayers against Section 4B, which was inserted in the Income Tax Ordinance, 2001 through the Finance Act 2015. AAG Aamir Rehman, on behalf of the Ministry of Finance, submitted that Rs114 billion were collected in terms of Section 4B, while the federation spent Rs117 billion on the rehabilitation of the TDPs, adding the estimated total cost of rehabilitation of TDPs was Rs80 billion. SC CB asks whether super tax is a 'tax' or 'fee' He stated that super tax, collected from affluent and rich individuals, association of persons, companies earning income above Rs500 million and the banks, is deposited into consolidate funds and from there through divisible pool is distributed among the federation and the provinces. The AAG said after the distribution under Article 160 of the Constitution the federal government from its share of 42.5 per cent spent the amount on the rehabilitation of the TDPs. Justice Jamal Khan Mandokhail questioned why super tax was imposed. Asma Hamid, FBR counsel in appeals against Lahore High Court (LHC) judgment, explained that if this amount (Rs80 billion) was spent from the existing budget amount then the government had to divert money from other projects, which could have affected them, therefore, super tax was imposed. Advocate Raza Rabbani, who also represented FBR in appeals against the Sindh High Court (SHC) judgment, argued that this levy has been imposed on income of every person specified in Division IIA of Part-I of the First Schedule, the Ordinance, 2001. It is a separate charge of super tax, in addition to the income tax, charged under section 4, the Ordinance, 2001, where a distinct mechanism for assessment, collection and recovery is provided. Both income tax and the super tax are imposed on the income, he added. Regarding argument that the tax levied under Section 4B is not tax as legislative procedure laid down in Article 73 is not followed, Raza Rabbani argued that in some federations of the world, Money Bills are passed by both Houses, in other federations Money Bills are passed by the Lower House of the Parliament, which comprises directly elected representatives of people. He said that Section 4B is a special tax and has been levied for a special purpose, and by virtue of the definition of taxation given in Article 260 of the constitution the parliament was well within its competence to impose such a tax. Raza Rabbani also contended that Entry 47 of the Fourth Schedule empowers the legislature to impose more than one tax on the income of a person. The term tax on income in Entry 47 effectively nullifies the arguments with regard to double taxation, adding the constitution does not impose a prohibition on double taxation but in fact permits the levy of more than one tax on income. He emphasised that before insertion of Section 4B, there was no provision for super tax in the Ordinance 2001. However, there is no bar on Parliament to insert, by way of an amendment in the law. He said that deliberately, a confusion is being created with a play of words that a tax has to have a characteristic of a 'general purpose', whereas, the law developed is for the 'general revenue' and 'public purpose', adding there are a string of judgments in which this characteristics, for 'public purpose' is discussed. Raza Rabbani has concluded his arguments. The case is adjourned until May 19. Copyright Business Recorder, 2025
