I. BACKGROUND (BG)

(1) This refers to the related Important TLQCs in trail, blue, italic and double Line (a) 3435 of 10.2.26 about Super tax u/s 4C: Adjust Demand from Refundable - Tribunal (b) 3434 of 4.2.26 about Super tax u/s 4B/4C: Demand challenged on non-rectified ground; Recovery stayed by SHC (c) 3431 of 1.2.26 about FCCP Short Order: Sections 4B/4C Super Tax almost intra vires Constitution details (2) More relevant TLQCs List is given Para IV for ready reference

II. UPDATED COMMENTARY

A. General

Further to KQU 3769 of 30.1.26 being an Important matter, we would inform you about Super Tax is a Super Shock - Pakistan’s Rubber Stamp Court & Practical Urgent Solution - Messrs Kamran Khan & Shabbar Zaidi (Attachment 3439.1) in the ensuing paragraph, with emphasis in bold & Underline for quick reading.

B. Foreign Investment Decline

The current situation reveals a decline in local and foreign investment, with FDI stagnating. The core issue revolves around the legality of implementing a super tax without clear purpose, prompting the FBR to issue recovery notices, raising concerns about the impact on businesses and cash flow. This could force businesses to scale down operations due to a sudden Cash Drain of 300 billion.

C. Tax Recovery Notices

The FBR has issued Notices for Recovery, prompting concerns about Cash Flow for businesses. If a considerable amount of cash is withdrawn, it may force businesses to downsize operations due to insufficient funds for retail purchases raw material, etc indicating a significant impact on the economy.

D. Government Intervention Proposal

The FBR has issued notices for recovery, raising concerns about the immediate withdrawal of 300 billion from the market, which could severely impact businesses and liquidity. It is suggested that the government introduce a Bill to adjust the tax rate and stagger the payments to ease financial pressure on local businesses, preventing drastic reductions in their operational capacity.

E. Super Tax as a Shock to Pakistani Businesses

Pakistan's Super Tax imposes an additional 10% levy on top of the existing 29% corporate income tax rate, effectively raising it to . This escalation shocks businesses because it suddenly drains working capital without gradual implementation, stalling operations after four years of prior application. Instead of labeling it "Super Tax," authorities could simply adjust the base rate to 39% directly, as the nomenclature adds no value but amplifies perception of punitiveness. 

High rates deter investment:

• Local investors avoid committing funds due to unviable returns.
• Foreign Direct Investment (FDI), inflows of capital from abroad for business setup or expansion, exists only nominally.
  This creates a feedback loop: reduced investment shrinks economic activity, further eroding tax bases over time. 

F. Legal Validity and Court Proceedings

The core legal dispute in the FCCP centers on whether Super Tax is valid without proper procedural steps (e.g., legislative propositions or "props"). No ruling has addressed this validity directly, leaving uncertainty. Speakers argue it is constitutionally sound, as the levy aligns with fiscal powers, but implementation via executive notices bypasses full parliamentary scrutiny.

This procedural gap explains why recovery feels arbitrary, forcing businesses into defensive litigation. 

G. Government Revenue Target and Recovery Mechanism

Authorities aim to extract Rs 300 billion from existing businesses through Super Tax to bolster federal consolidated funds. The FBR, Pakistan's primary tax collection agency, has issued recovery notices demanding immediate compliance. However, generation of this revenue is impractical:

• Businesses treat tax payments as a "hobby" (unsustainable luxury), not core operations.
• Sudden cash outflow drains liquidity, compelling firms to shrink scale—e.g., reducing shop sizes due to inability to purchase raw materials (e.g., "ro be til," likely raw betel or inputs). 

H. Cash Drain Mechanism

1. Notices demand payment within tight deadlines (e.g., 15 days).
2. Firms dip into working capital, halting reinvestment.
3. Result: Smaller operations, lower future tax yields—counterproductive to revenue goals. 

I. Practical Urgent Solution via Legislation

To resolve urgently, government should introduce a parliamentary bill:

• Reduce Super Tax rate to .
• Apply retrospectively (
• Stagger payments over time, easing cash flow.

After four years of application, further hikes risk zero compliance; this phased reduction could stabilize revenues while reviving business confidence. Executive or financial marshal interventions (e.g., asset seizures) would exacerbate shutdowns, making legislation essential.

III. LIST OF FURTHER TLQCs ABOUT SECTION 4B/4C 

(a) 3433 of 2.2.26 about 4B & 4C Recovery measures, its Economic impact and PTBA recommendations

(b) 3432 of 2.2.26 about Section 4C: FCCP Order's Mr Shabbar Zaidi Comments

(c) 3429 of 29.1.26 about PSX Fallen as KC predicted & may fall more, as 4B & 4C FCCP order 

(d) 3428 of 28.1.26 about IT S. 4B & 4C upheld by Federal Constitutional Court against Taxpayers Press Release DNVC based Comments (without Short Order) & KC Views as to Major Implications

(e) 3433 of 2.2.26 about 4B & 4C Recovery measures, its Economic impact and PTBA recommendations

(f) 3315 of 24.10.25 about Super Tax u/s 4C: Senate proposed 4% while NA levied 10% 

(g) 3312 of 21.10.25 about of 4B & 4C Super Tax is on Windfall & not Feasible to be taxed 

(h) 3309 of Sunday 19.10.25 about 4B & 4C Super Tax Imposed without Policy Statement & not an FTR 

(i) 3308 of 15.10.25 about 4B & 4C Super Taxes are not Retrospective and could be Discriminatory 

(j) 3305 of 13.10.25 about 4B & 4C Super Tax cannot be Retrospective, as not Beneficial 

(k) 3304 of 11.10.25 about 4B & 4C Super Tax is not Retrospective - Bangladesh Tax @21% while Pakistan Tax @93% 

(l) 3301 of 10.10.25 about 4B & 4C Super Tax: Think Tank absence; Additional tax or not; & Industrialists leaving Pakistan as Higher Taxes 

(m) 3364 of 28.11.25 about 4B & 4C Super Taxes pending cases to FCCP. Hearing on 1.12.25 cum Major effects 

(n) 3363 of 28.11.25 about Constitution of the Islamic Republic of Pakistan 

(o) 3312 of 21.10.25 about of 4B & 4C Super Tax is on Windfall & not Feasible to be taxed 

(p) 3308 of 15.10.25 about 4B & 4C Super Taxes are not Retrospective and could be Discriminatory 

(q) 3305 of 13.10.25 about 4B & 4C Super Tax cannot be Retrospective, as not Beneficial 

(r) 3304 of 11.10.25 about 4B & 4C Super Tax is not Retrospective - Bangladesh Tax @21% while Pakistan Tax @93% 

(s) 10+ Other TLQC about SCP Stay order Hearings stay order

(t) 30+ TLQC about SHC, LHC & IHC and related matters

(u) 2673 of 19.3.24 about 4C TY 2023 IHC order in Sindh, Punjab, etc Taxpayers' favour in case of Pakistan Oil Field, etc 

(v) 2422 of 21.7.23 about IHC Super Tax 4C order in Taxpayers Favour in case of Fauji Fertilizer, etc 

IV. FURTHER DETAILS & SERVICES

Should you require any clarification or explanations in respect of the above or otherwise, or require Advance on 4B or 4C, Income Tax, Federal & Provincial Sales Tax or Withholding Tax Statement, Advisory, Return Filing or Review services, please feel free to email Mr Amsal at amsal@kasbati.co with CC to info.kasbati@professional-excellence.com, asif.s.kasbati@professional-excellence.com.

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Asif S Kasbati (FCA, FCMA & LLB)

Managing Partner 

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