LAHORE: The Pakistan Tax Bar Association (PTBA) has urged the Federal Board of Revenue (FBR) to immediately instruct its field formations to stop the levy of default surcharge on Super Tax, stating that such action goes against the understanding previously reached between the two sides and may create legal and economic complications for taxpayers.
In a letter addressed to FBR Chairman Rashid Mahmood Langrial, PTBA President Sh Ahsan Ul Haq and General Secretary Tahir Mahmood Butt expressed concern over the implementation of recovery measures following recent judgments of superior courts relating to Sections 4C and 4B of the Income Tax Ordinance, 2001, along with the imposition of default surcharge.
The PTBA highlighted that recent rulings, including those of the Federal Constitutional Court and the Islamabad High Court, have clarified the constitutional validity and independent nature of Super Tax under Section 4C.
While the Federal Constitutional Court upheld Super Tax as intra vires the Constitution, the Islamabad High Court in relevant petitions held that the liability under Section 4C is independent and does not permit adjustment of withholding tax or issuance of refunds under other provisions of the Ordinance.
According to the PTBA, field formations have now begun issuing notices for the levy of default surcharge under Section 205 of the Income Tax Ordinance, and in some cases proceedings are being finalized under Sections 205 and 137 in cases of non-compliance.
The association raised a key legal concern, questioning that if Super Tax liability under Section 4C is treated as independent and standalone, then on what legal basis penal and recovery provisions are being applied while relief provisions such as adjustments and refunds are being denied.
The PTBA stated that this creates an inconsistency in the interpretation and application of tax law, arguing that if the liability is considered independent for restrictive purposes, then the same principle should be applied uniformly in respect of recovery and penal provisions as well.
Referring to a meeting held at FBR Headquarters on February 27, 2026, the association recalled that a consensus was reached between tax bar representatives and the FBR to implement court judgments in a facilitative and amicable manner, particularly regarding withholding tax adjustments and refunds.
However, the PTBA noted that subsequent judicial developments have created uncertainty among taxpayers, especially after the Islamabad High Court’s interpretation regarding the independent nature of Super Tax liability.
The association further warned that aggressive recovery measures and imposition of default surcharge may create undue hardship for taxpayers and discourage voluntary compliance. It urged the FBR to ensure uniform and fair implementation of law and to prevent contradictory enforcement practices by field offices.
In its concluding request, the PTBA appealed to the FBR Chairman to direct field formations to refrain from charging default surcharge on Super Tax in line with earlier mutual understanding, in order to reduce litigation, provide clarity, and support a more stable tax compliance environment in the country.
