The Supreme Court of Pakistan (SCP) on Monday continued hearing on a case concerning the applicability of super tax to provident funds. A five-member constitutional bench, headed by Justice Aminuddin Khan, is examining the arguments from the Federal Board of Revenue (FBR) and opposing counsel.
During proceedings, FBR counsel Asma Hameed argued, “The legislature has provided partial relief to provident funds under the super tax law.”
Justice Muhammad Ali Mazhar remarked that Section 53 of the Income Tax Ordinance relates to exemptions, adding: “A fund is not anyone’s private property; trustees manage it, and tax is applied to the relevant authority.”
Justice Aminuddin Khan observed that responsibility for payment of super tax was set out in the schedule. Justice Hasan Azhar Rizvi questioned the rationale: “When income tax cannot be imposed, how can super tax be imposed? For example, if Rs100 is taxed on a fund now, in 25 years it could grow to Rs550 — meaning retirement benefits would be lost.”
Additional Attorney General maintained that the second schedule provided exemptions on provident funds for ‘super tax as well as all other tax laws’. Justice Jamal Khan Mandokhail, in a light gesture, remarked to the law officer: “You are showing counsel the way forward.”
Hameed further argued that the legislature regarded the sector as extremely important for government, and taxpayers were interpreting the Islamabad High Court (IHC) ruling along with Section 4C to claim they were not bound to pay super tax. “Whenever additional tax is required, the department will notify,” she said, adding, after a certain cap, income and super tax reduce but do not end. Source
