Court upholds super tax, grants relief to oil and gas companies

January 28, 2026 (MLN): Pakistan’s Constitutional Court has delivered a final verdict on the country’s super tax, bringing an end to years of legal uncertainty.

Several companies had challenged the tax in different High Courts, arguing that it was unconstitutional or could not be applied to earlier tax years. The Constitutional Court rejected these arguments.

Earlier High Court decisions had exempted taxpayers from paying the levy for that year, but the Constitutional Court overturned those judgments. The court held that applying the tax to 2022 was lawful because tax returns for that year had not yet been filed when the law was enacted.

Banks have also been brought clearly within the scope of the super tax. The court ruled that banking companies are liable to pay the tax from the 2023 tax year onwards, in line with amendments made in 2023, according to the short order issued.

Oil and gas exploration companies received limited relief. The court held that the super tax will apply to these companies only if it does not cause their overall tax burden to exceed the limits agreed in their contracts with the government. Tax authorities have been instructed to examine each contract separately and issue fresh notices after giving companies an opportunity to be heard.

The court also upheld a higher rate of super tax for fifteen business sectors whose income exceeded Rs300 million in 2022.

In another important clarification, the court ruled that profits earned from the sale of shares and securities are subject to super tax. This settles a long-standing question about whether capital gains fall within the scope of the levy.

At the same time, the court confirmed exemptions for certain welfare entities. Provident and benevolent funds that hold valid tax exemption certificates will not be required to pay super tax. These funds must submit their certificates to tax authorities within 15 days.

The ruling brings uniformity after years of conflicting judgments from different courts. While it provides legal certainty, it also means that many companies and financial institutions will now need to reassess their tax liabilities for recent years and prepare for compliance.

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