Super tax payments: KTBA says concerned at ‘illegal’ surcharge proceedings against taxpayers

KARACHI: Karachi Tax Bar Association (KTBA) has raised serious concerns over what it describes as unlawful default surcharge proceedings being initiated against taxpayers over super tax payments, urging the Federal Board of Revenue (FBR) to immediately review and withdraw such actions. In a letter addressed to the FBR Chairman, KTBA said that field formations have launched default surcharge proceedings under Section 205 of the Income Tax Ordinance, alleging non-compliance with payment timelines even in cases where taxpayers had already discharged the principal amounts of super tax and were acting in accordance with binding court orders. READ ALSO: Super tax case: FBR counsel urges SC to set aside IHC ‘overreach’ The bar pointed out that in numerous cases, default surcharge proceedings were initiated despite taxpayers having lawfully relied on subsisting stay orders, judicial pronouncements, and appellate relief granted by competent legal forums, all of which either restrained or legally justified the timing of payments. Crucially, the Sindh High Court, through an order dated December 22, 2022, had declared the Super Tax levy for Tax Year 2022 ultra vires the Constitution. KTBA’s letter stressed that this binding judgment, issued under Article 201 of the Constitution, required strict compliance by the FBR and all its field formations. “This legal position remained authoritative until the matter’s final determination by the Federal Constitutional Court on January 27, 2026. Throughout this period, the Sindh High Court’s order remained effective and was consistently followed in appellate proceedings before the Commissioner Inland Revenue (Appeals) and the Appellate Tribunal Inland Revenue, ” the letter said. The bar further said that taxpayers had similarly acted in accordance with binding directions from the Islamabad High Court regarding the retrospectivity of rates and super tax chargeability on income under the final tax regime. KTBA also highlighted a glaring inequity in the tax administration’s approach. While default surcharge orders have been issued against taxpayers, excess tax payments declared in submitted returns and pending refunds have yet to be processed by the department. “Imposing surcharge without properly accounting for these outstanding refund amounts is not aligned with the principles of equity and fair tax administration, ” the letter said, calling the situation contradictory and unjust. KTBA further cited that the super tax is primarily applicable to high-earning individuals and corporations that make significant contributions to Pakistan’s economy and national exchequer, arguing that burdening these taxpayers with additional financial liabilities arising from surcharge proceedings while simultaneously delaying the processing of their legitimate refunds is “neither conducive to fostering a cooperative tax environment nor supportive of economic growth. ” In light of these concerns, KTBA has called on the FBR to take immediate corrective action. All default surcharge proceedings under Section 205 should be reviewed and withdrawn in cases involving stay orders, judicial pronouncements, appellate relief, or refundable tax credits, following thorough verification of facts and applicable law, and necessary instructions should be issued to facilitate the prompt processing and issuance of due tax refunds in accordance with the law, it added. Copyright Business Recorder, 2026

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