The Supreme Court heard on Monday petitions contesting the taxation of a super tax on the provident funds, with a constitutional bench of five members led by Judge Amicin Khan wondering if such a levy is justified when the income tax itself is exempt.
During the hearing, judge Muhammad Ali Mazhar cited article 53 of the income tax order, which provides exemptions and asked if a trust fund could be treated as private property.
Judge Hasan Azhar Rizvi warned that repeated tax deductions could erode retirement services over time, observing that an initial levy could increase considerably and reduce the expected payments of employees.
Judge Rizvi also asked for how a great advanced tax could be calculated, a concern postponed by judge Mazhar, who noted that the prior payments would be difficult without final profits.
The additional prosecutor general argued that the second calendar grants exemptions, including super taxes, but argued that the government can impose additional samples if budgetary needs arise.
ASMA HAMID lawyer for the provident funds benefit from a statutory compensation and that a super tax contradicts the legislative intention.
The bench noted that the responsibility for the payment of super taxes is mentioned in the relevant calendar, but wondered if the government can impose a levy when income tax itself cannot be applied.
Read: SC questions a “Super tax burden on ordinary man”
Later, the lawyer for the Federal Board of Return (FBR), Hafiz Ehsan, began brief bids, claiming that he would help the court on legal and constitutional points and would adopt the arguments already presented by Hamid.
Judge Muhammad Ali Mazhar urged the lawyer to finish the arguments on key issues at the next hearing. Hafiz Ehsan only asked for ten more minutes, but Judge Aminuddin Khan noted that the session could not continue due to the other commitments of a judge, causing adjournment.
The hearing was adjourned until Tuesday.
The petitions dispute the legality of the super taxes imposed on certain sectors, arguing that it goes beyond the constitutional authority of the government.
Super taxes
The Super Tax is an additional direct debit on individuals, companies and high industries, intended for large companies. In the federal budget of 2022-2023, the government has imposed up to 10% super taxes on the main sectors, including cement, steel, sugar, oil and gas, fertilizers, banks and textiles, citing the need to increase additional income for economic stabilization.
Petitions contesting the levy were filed before the Superior Court by individuals and organizations. During the previous hearing, the bench was informed by the FBR that no one had disputed the verdict of the High Court of Lahore (LHC), respecting the legality of the super tax imposed under article 4C of the income tax order, in 2001, while reducing its rate by 10% to 4% for 16 sectors, including the bank and offering partial repair to the petitioners.
Earlier this year, the Apex Court wondered if the center could distribute subsequent tax revenue to the provinces, noting that if the levy has been extended since 2016, no funds had been used for the declared objective.
Find out more: The Supreme Court CB gives the distribution of super taxes to the provinces
During a recent audience, the bench raised concerns about the impact of the super tax on ordinary citizens, judge Mazhar observing that it was a bag of cement or an expedition of liquefied natural gas, “the whole burden is common man”.
“Business will flourish, if we make things easier for people,” he added.
“Do not discourage taxpayers – when you do it, people end up leaving the country,” warned judge Mandokhail.
Hamid then said that only 15 sectors with revenues exceeding 300 million rupees were responsible for the super tax and that no business had claimed an inability to pay. The bench pressed the FBR to explain why the distinctions among taxpayers have been created, stressing that budgetary measures should not redo the burden to the public.
