ISLAMABAD, JAN 27 /DNA/ – The apex court has revived Sector 4 b of the tax law, whereby the govt is allowed to impose super tax. The Constitutional Court announced long awaited verdict on Tuesday.

WHAT IS SECTION B

Section 4B of the Income Tax Ordinance, 2001 (Pakistan), introduced through the Finance Act, 2015, mandates the payment of a Super Tax for the rehabilitation of temporarily displaced persons (TDPs).

Key aspects of Section 4B include:

Applicability: The tax applies to high-earning individuals, association of persons, and companies.

Threshold: It is imposed on persons earning an annual income of Rs. 500 million or above (for tax year 2015 and onwards).

Banking Companies: Super tax is levied on banking companies regardless of the quantum of income.

Rates: Initially introduced at 4% for banking companies and 3% for others.

Definition of Income: Under Section 4B(2), “income” is defined as the sum of all sources, including profit on debt, dividend, capital gains, brokerage, commission, and taxable income under all heads (salary, property, business, etc.).

Legal Standing: Although initially introduced as a one-time tax, it was extended in subsequent years. It has faced numerous legal challenges regarding its constitutionality and nature as “double taxation,” but has generally been upheld by high courts.