You can't super-tax what you can't tax: SC

May 01, 2026 (MLN): In a landmark ruling, the Supreme Court of Pakistan has held that super tax cannot be levied on the sale of immovable property or shares where such income already enjoys an exemption under the Income Tax Ordinance.

The court, in its judgment clarified in paragraph 92 that super tax is an additional tax on income drawing its legislative authority from Entry 47 of Part I of the Federal Legislative List of the Constitution, and as such, it can only be imposed where the underlying income itself is taxable.

"If a certain class of income is exempt from tax under the law regulating it, i.e. the Ordinance, super tax shall also not be payable in respect of such income," the judgment states.

The court gave specific examples, noting that where no tax is payable on capital gains arising from the disposal of immovable property or securities, whether because the asset was held beyond a prescribed period, was inherited, or is otherwise exempt, no super tax would be applicable either.

The ruling further extends to agricultural property, which "cannot be subjected to any tax on income arising therefrom either by usage or by disposal."

The decision is expected to bring significant relief to taxpayers who had faced super tax demands on otherwise exempt transactions, and is likely to prompt fresh challenges to assessments already raised by the Federal Board of Revenue.

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