Karachi: The Karachi Tax Bar Association (KTBA) has formally written to tax authorities expressing grave concern over the initiation of default surcharge proceedings under Section 205 of the Income Tax Ordinance, 2001, on Super Tax payments.
In its representation, KTBA stated that taxpayers discharged the principal Super Tax amount in full compliance with the Federal Constitutional Court’s short order. Despite this, field formations are issuing default surcharge notices citing alleged delays in payment timelines.
KTBA emphasized that many such proceedings ignore bona fide reliance on subsisting stay orders, judicial pronouncements, and appellate relief from competent forums. These legal protections had restrained or justified payment timing for affected taxpayers.
The bar highlighted that imposing surcharge while ignoring declared excess tax payments and pending refunds violates principles of equity and fair tax administration. Many high-earning taxpayers, who contribute significantly to Pakistan’s economy, face delays in refund processing but are now burdened with additional surcharge liabilities.
Citing the legal framework, KTBA noted that the Sindh High Court, in its order dated December 22, 2022, declared the Super Tax levy for Tax Year 2022 ultra vires the Constitution. This binding judgment under Article 201 remained authoritative until the Federal Constitutional Court’s final decision on January 27, 2026. Throughout this period, the SHC order was followed by Commissioner Inland Revenue (Appeals) and the Appellate Tribunal Inland Revenue.
Taxpayers also acted per Islamabad High Court directions on retrospectivity of rates and Super Tax chargeability under the Final Tax Regime. KTBA argued that imposing default surcharge where payment timing was directed by courts undermines the rule of law and taxpayer confidence.
The association urged authorities to immediately review and withdraw all default surcharge proceedings involving stay orders, judicial relief, or refundable credits after due verification. It also requested clear instructions for prompt issuance of due tax refunds.
KTBA stressed that such measures are vital to foster a cooperative tax environment and support economic growth, especially when compliant, high-earning taxpayers face financial strain from surcharges despite pending refunds.
