SUPER TAX IN THE DOCK COURT ASKED TO VERIFY COLLECTION VS PURPOSE
The Federal Constitutional Court has been told that around Rs 114 billion was collected under Section 4B (Super Tax) during 2015–2020, while Rs 117 billion was spent on rehabilitation of temporarily displaced persons (TDPs). Taxpayers’ counsel argued that Super Tax was presented as a purpose-linked, one-time measure, and therefore the state must clearly demonstrate how much was collected, where it went, and whether the levy continued beyond its stated objective. The FBR, on the other hand, argued that Super Tax is a pure tax (not a fee) because there is no “service in return” for the payer, and collections go into the Federal Consolidated Fund. This case matters because it touches the core questions of constitutional legitimacy, transparency, and limits on revenue powers.
FBR TIGHTENS THE NET 63 MAJOR COMPANIES SHIFTED UNDER DIRECT OVERSIGHT
The FBR has moved the tax jurisdiction of 63 large companies to its direct control to strengthen monitoring and enforcement. Practically, this means these corporate taxpayers are likely to face closer scrutiny, faster follow-ups, and more centralized control of their cases. The reported legal basis includes Section 209 of the Income Tax Ordinance, 2001, which allows transfer of jurisdiction between tax authorities. The move also covers multiple laws (income tax, sales tax, excise, ICT services tax), signalling a broader push toward high-value compliance management and revenue protection.
SALARIED CLASS STILL CARRYING THE SYSTEM RS.266 BILLION PAID IN SIX MONTHS
Provisional figures show salaried individuals paid over Rs.266 billion in income tax during July–December, contributing nearly one-tenth of total income tax collection in that period. The document also highlights the structural imbalance: salaried taxpayers are typically taxed on gross income (with limited ability to claim business-style deductions), making them the easiest to tax because they are already documented. Meanwhile, enforcement against other segments remains uneven. This is exactly why “fairness in taxation” keeps showing up as a public debate, because the burden is visible, consistent, and heavily concentrated.
TAX COMPLAINTS SHOULDN’T FEEL LIKE A MAZE: FTO CALLS FOR SIMPLE PUBLIC ACCESS
The Federal Tax Ombudsman (FTO) has emphasized that taxpayers should be given easy access to grievance redressal, backed by a simplified outreach strategy. The core message is important: even a strong legal system becomes ineffective if ordinary taxpayers don’t know where to go, how to complain, or how long it takes. Strong complaint mechanisms reduce harassment risk, improve accountability, and create pressure for better administrative behaviour—especially where procedural delays or unfair practices hurt compliant taxpayers.
DIGITAL COMPLIANCE GATEKEEPING FBR RECONSTITUTES SALES TAX INTEGRATION LICENSING COMMITTEE
FBR has reconstituted the committee that evaluates applications for Sales Tax integration licensing and also reviews complaints for possible cancellation of licences. This is significant for businesses using POS/integration systems, tech providers, and registered persons whose operations depend on seamless digital reporting. The committee’s scope includes scrutiny of documents, eligibility evaluation, further checks in earlier-registered cases, and handling complaints, so it is not just a “licence grant” body; it’s also a compliance enforcement lever.
PUNJAB REVENUE AUTHORITY’S EXPANSION PLAN 100 NEW SECTORS TO BROADEN THE TAX BASE
The PRA is considering establishing 100 new sectors to expand the tax net, along with induction of additional officers and structured training for enforcement. This is not just “more departments”, it signals a strategy to map the economy more granularly, identify leakages, and improve enforcement in under-taxed service segments. If implemented well, it can improve revenue without simply increasing pressure on already documented taxpayers.
FAKE TRACK & TRACE STAMPS: ENFORCEMENT TURNS HARD ON SUPPLY CHAINS
Authorities detained trucks carrying 1,800 bags of sugar allegedly bearing fake Track & Trace System (TTS) stamps. This development matters beyond one seizure: it shows continued pressure to protect the integrity of digital enforcement tools used to curb under-reporting and undocumented movement of goods. For businesses, it’s a compliance signal: weak controls in procurement and logistics can quickly become a tax exposure, not just an operational issue.
IMPORTER RELIEF FROM SHC GOODS CAN’T BE DESTROYED ON A SINGLE QUESTIONABLE TEST
The Sindh High Court suspended the confiscation/destruction (or re-export) order for imported betel nuts until a fresh sample is drawn and tested by another panel lab, at the importer’s cost. The Court noted concerns including compromised seal issues and emphasized that decisions of such magnitude should not rest on one disputed test, especially where the importer holds relevant certifications from the exporting country. This is a strong due-process signal: regulators must act for safety, yes, but also with procedural fairness and reliable testing.
“JUSTICE DELAYED IS REVENUE DENIED” TOP COURT MOVES TO UNLOCK STUCK TAX CASES
The Chief Justice has openly linked delayed tax litigation with economic damage. When high-value tax cases remain unresolved for years, government revenue stays locked, businesses face uncertainty, and investors hesitate. The proposed reforms, including dedicated tax benches, screening of weak cases, and better coordination between courts and tax authorities, aim to make tax justice faster, predictable, and economically meaningful.
NO MONITORING, NO PRODUCTION SUGAR SECTOR UNDER TIGHT DIGITAL CONTROL
The sealing of sugar mill chutes for failing to install digital eye cameras and tracking systems signals a new enforcement mindset. The government is now watching production, movement, and sales in real time through technology. For sugar mills, compliance is no longer a paperwork exercise, it directly determines whether operations can continue.
MANUAL FILERS IN TROUBLE WHEN COMPLIANCE STILL GETS PENALISED
Despite official extensions and Ombudsman directions allowing manual return filers extra time, many taxpayers were still marked “inactive.” This status triggers higher withholding taxes and restricts financial transactions. Legal experts argue that this reflects administrative overreach, where internal instructions override taxpayer protections guaranteed by law.
RS 1.56 BILLION SLIPPED AWAY THE REAL COST OF WRONG TAX EXEMPTIONS
Audit findings show that tax exemptions were granted on goods that were never eligible under the law, leading to a loss exceeding Rs 1.5 billion. Even more concerning is that similar issues have appeared year after year. This points to systemic weaknesses, where exemptions are granted casually, recoveries drag on in courts, and responsibility is rarely fixed on decision-makers.
PUNJAB COURT CLARIFIES SALES TAX RULES FOR FINANCIAL INSTITUTIONS
The Lahore High Court has drawn a clear distinction between taxable service income and exempt interest income for non-banking financial institutions. While fees and commissions attract sales tax, markup remains excluded. However, the court firmly ruled that input tax must be proportionately adjusted, claiming 100% input against mixed income streams is legally unsustainable.
REVENUE GROWTH WITHOUT NEW TAXES PROOF THAT REFORMS WORK
Punjab and Khyber Pakhtunkhwa have posted strong growth in sales tax collections, largely due to digitisation, enforcement reforms, and better data tracking. This shows that improved systems and compliance can increase revenue without imposing new tax burdens on already-stressed businesses.
SUPER TAX BACK IN COURT BUSINESSES STILL WATCHING CLOSELY
The Federal Constitutional Court (FCC) is set to hear Super Tax cases under Sections 4B and 4C from January 5. This matters because these cases can shape how far the government can go in imposing “extra” tax on high-income entities and selected high-profit sectors. If the court upholds the levy, businesses may face ongoing exposure; if it strikes it down or limits it, many companies could seek relief or refunds depending on their facts and procedural history. For now, it’s a reminder: Super Tax is not “settled law” yet, so corporate tax planning and provisioning need to stay cautious.
EXPORTERS’ RETURNS UNDER REVIEW NOT A “CRACKDOWN,” BUT STILL SERIOUS
Exporters are alarmed because FBR instructed field formations to review tax year 2025 returns after the Finance Act, 2024 changed exporters from a final tax regime to a minimum tax regime. FBR’s position is: they are not trying to impose unjust taxation, rather, they want to ensure the return treatment matches the amended legal framework, and to catch inconsistencies or unusual reporting patterns. Practically, exporters should expect desk review questions where taxable income looks significantly lower without clear commercial or accounting justification. The safe move is to keep workings ready: reconciliation of export turnover, profit calculations, adjustments, and the legal basis used in the return.
TAX TARGET PRESSURE MORE RECOVERY, MORE ENFORCEMENT MINDSET
FBR leadership has held meetings to finalize strategy for meeting targets in the second half of FY 2025–26, with emphasis on recoveries (including court-related stuck-up amounts) and enforcement / administrative measures. The overall theme is pressure management: when targets are tight, administrations lean harder on audits, recoveries, and compliance drives, often through quicker “desk-based” scrutiny and follow-up notices. For taxpayers, this is the season where weak explanations, missing reconciliations, and inconsistent return positions tend to get flagged faster.
500 TOP EXPORTERS UNDER SCRUTINY — WHAT’S GOING ON?
The Federal Board of Revenue has directed its field offices to review the tax declarations of nearly 500 major exporters for tax year 2025. The main trigger is the legal change made through the Finance Act, 2024, where export proceeds moved from a final tax setup to a minimum tax setup. After this change, FBR says it noticed unusual drops in taxable income reported by several exporters, and now wants to check whether the reductions are normal business outcomes or unsupported adjustments. The concern in the exporters’ community is not just the review itself, but the enforcement approach, because the directive also refers to stronger actions like audits, re-opening of assessments, and even posting of officers at business premises. Exporters and business councils argue this creates fear and uncertainty, especially when the government is publicly pushing export-led growth and promising ease of doing business.
TAX SHORTFALL ALERT — WILL NEW TAXES BE TRIGGERED?
FBR’s provisional figures show a tax collection shortfall of around Rs 336 billion against the assigned target. This matters because such gaps can lead to “contingency” tax measures, especially under IMF-linked commitments, meaning the government may introduce additional taxes to cover the shortfall. The article specifically points to possible steps like increasing Federal Excise Duty on fertilizers and pesticides and bringing excise duty on certain high-value sugary items, along with expanding the sales tax base by shifting selected items to the standard rate. In simple words: if revenue stays behind target, the government may try to recover it by raising or expanding taxes that can affect costs across the economy.
WHOLESALE & RETAIL TAX FIGHT — WHO HAS THE RIGHT TO TAX WHAT?
A major debate is building around whether wholesale and retail trade can be treated as a “service” for sales tax purposes under provincial laws. Pakistan runs a dual system: the federal government collects sales tax on goods, while provinces collect sales tax on services. The problem starts when wholesale and retail, where goods are bought and sold and ownership changes hands, are labelled as “services” without properly matching how business actually works. If wholesalers and retailers are treated purely as service providers, it creates confusion about who owns the inventory, when revenue should be recorded, and how the supply chain should be taxed. It can also clash with the constitutional position that sales tax on goods is a federal subject. The suggested practical way forward is a hybrid approach: federal sales tax should apply on goods up to the final consumer price, provinces should tax the actual services element (where it clearly exists), and the system should be integrated so input credits and reporting are properly reconciled, until any long-term constitutional reform brings a unified GST model.
FTO DECLINES BLANKET RELIEF ON DEEMED INCOME TAX (SECTION 7E)
The Federal Tax Ombudsman has refused to extend across-the-board relief on deemed income tax for immovable properties in Punjab. The complainant sought parity with taxpayers who had received interim relief from the Supreme Court, arguing equal treatment under Article 25 of the Constitution. However, the FTO held that once the Supreme Court of Pakistan has already issued directions, tax authorities are bound to follow them strictly, and the Ombudsman cannot widen or generalize that relief on its own. The case was therefore closed without further investigation.
MAJOR TAX RELIEF FOR GILGIT-BALTISTAN TRADERS
The federal government has approved wide-ranging tax exemptions for GB traders importing goods from China via the Khunjerab Pass. Income tax, sales tax, and federal excise duty exemptions have been granted on over 2,400 items, subject to an annual cap of Rs 4 billion. The concessions apply strictly to locally domiciled traders and are enforced through a quota-based digital clearance system. Any diversion of exempted goods outside GB can result in partial or complete withdrawal of the concession, signaling strict monitoring by customs authorities.
DOCTORS FACE INTENSIFIED TAX ENFORCEMENT
To tackle widespread under-reporting in the healthcare sector, FBR has begun placing Inland Revenue officers directly at private hospitals and clinics. Official data shows that a large portion of registered doctors either do not file returns or declare unusually low incomes. On-site monitoring aims to capture real-time receipts, encourage voluntary compliance, and expand the tax base in one of the country’s highest-earning professions.
SECTION 7E REMAINS CONTESTED — ONLY 50% PAYMENT ALLOWED FOR NOW
The controversy around section 7E is far from settled. While the Sindh High Court and a divisional bench of the Lahore High Court upheld the provision, several other High Courts declared it unconstitutional. The Supreme Court has not yet issued a final verdict but granted interim relief requiring taxpayers to deposit only 50% of the tax, with the balance subject to the final outcome. If taxpayers succeed, the deposited amount will be refunded; if not, the remaining liability becomes payable. The dispute highlights the uncertainty faced by property owners across different provinces.
SALES TAX FRAUD: STRONG FTO DIRECTIONS, WEAK ENFORCEMENT
The FTO has issued forceful recommendations to curb sales tax fraud involving fake and flying invoices, estimated to have caused losses exceeding Rs 15 billion. These directions include blacklisting STRNs, conducting complete chain audits, initiating disciplinary action against complicit officials, and deploying advanced IT-based alert systems. Despite the clarity of these instructions, the Federal Board of Revenue has yet to implement many of them, raising serious questions about institutional resolve and accountability.
CTO LAHORE RECOVERS RS 2.6 BILLION IN A SINGLE CASE
In a major enforcement action, the Corporate Tax Office Lahore successfully recovered Rs 2.646 billion from a taxpayer after completing assessment proceedings and following due legal process. The recovery demonstrates the growing emphasis on post-assessment enforcement and sends a clear message that non-compliance, especially in high-value cases, will be pursued decisively.
ISLAMABAD HIGH COURT CONDEMNS ‘INSTITUTIONAL MANIPULATION’ BY FBR
In a landmark judgment, the Islamabad High Court criticized the FBR for unlawfully extending time-barred audit proceedings through self-condonation. The Court described the conduct as “institutionalised manipulation,” stating that such actions damage public revenue more than taxpayer evasion. The judgment ordered the matter to be placed before the FBR Chairman for disciplinary action, reinforcing the importance of statutory timelines and procedural discipline.
CYBER TAX FRAUD: FTO ORDERS IMMEDIATE CRACKDOWN
The newly appointed FTO has taken a hard stance against cyber fraud involving hacked taxpayer profiles and fraudulent sales tax returns. The order highlights systemic weaknesses in data security, internal controls, and alert mechanisms within PRAL and FBR systems. Authorities have been directed to trace IP addresses, prosecute beneficiaries of fake supplies, and fix internal loopholes that allow repeated manipulation of taxpayer data.
PORTS REMAIN CONGESTED DESPITE END OF TRANSPORTERS’ STRIKE
Even after the strike ended, cargo movement at Karachi ports remains severely disrupted due to poor infrastructure, single-road access, and lack of traffic management. Freight rates have doubled in some cases, demurrage costs are mounting, and delays are feeding directly into inflation. The episode exposes deeper structural failures that continue to undermine trade efficiency and raise the cost of doing business.
PAKISTAN’S TAX-TO-GDP RATIO LIKELY TO REMAIN STUCK DESPITE NEW TAX MEASURES
The International Monetary Fund has projected that Pakistan’s federal tax-to-GDP ratio will largely stagnate over the next five years, even after introducing record tax measures worth trillions of rupees. While tax collections increased sharply in FY25, the IMF believes that without deep structural reforms, such as simplifying tax laws, resolving disputes faster, and expanding the tax base, Pakistan will struggle to move beyond the long-standing 10–11% tax-to-GDP range. This stagnation limits the government’s ability to fund development, social protection, and climate-related spending.
TRANSPORTERS’ STRIKE DISRUPTED TRADE, KCCI DEMANDS WAIVER OF DEMURRAGE AND DETENTION CHARGES
Multiple tax appeals filed by the tax department have been dismissed by courts for being time-barred, causing permanent loss of revenue to the exchequer. Legal bodies have termed this a sign of institutional failure and weak internal controls within the tax administration. The issue highlights the need for stronger accountability mechanisms, better case management, and professional handling of tax litigation.
EASE OF DOING BUSINESS DEPENDS ON REAL TAX ADMINISTRATION REFORM
Business associations continue to raise concerns over refund delays, system downtimes, manual verifications, aggressive audits, and complex digital compliance requirements. Meetings with senior tax officials underline a recurring theme: meaningful ease of doing business cannot be achieved through revenue pressure alone. Predictable procedures, transparency, timely refunds, and reduced harassment are essential to encourage voluntary compliance and long-term investment.
FBR ACHIEVES RECORD COLLECTIONS BUT STILL FALLS SHORT OF TARGETS
The Federal Board of Revenue recorded its highest-ever tax collections in FY25, yet still missed both budgetary and IMF programme targets. A large part of this gap is attributed to unresolved tax litigation, administrative inefficiencies, and slower economic growth. This highlights a critical issue: increasing tax rates and enforcement pressure alone does not guarantee sustainable revenue unless accompanied by better systems, faster dispute resolution, and improved taxpayer confidence.
SECTION 109-A CASE: FEDERAL CONSTITUTIONAL COURT RESTORES LEGAL ORDER
The Federal Constitutional Court has set aside an order of the Sindh High Court’s Constitutional Bench relating to Section 109-A of the Income Tax Ordinance, 2001. The Court clarified that, before recent constitutional amendments, such matters could only be heard by regular benches. This decision is significant for taxpayers facing notices related to foreign assets or transactions, as it reinforces jurisdictional discipline and protects taxpayers from procedurally flawed actions.
HIGH COURT PUSHES BACK AGAINST COERCIVE TAX RECOVERY ACTIONS
The Peshawar High Court has taken serious notice of aggressive tax recovery actions such as bank account and factory attachments. The Court emphasized that tax authorities cannot bypass due process under the Income Tax Ordinance, particularly when disputes are pending. This development strengthens constitutional protections for taxpayers and signals judicial intolerance for recovery measures taken without lawful authority.
CUSTOMS CRACKDOWN ON SMUGGLED FUEL HIGHLIGHTS ENFORCEMENT DRIVE
Customs authorities have intensified operations against fuel smuggling, resulting in large-scale seizures of diesel, petrol, and transport assets. While these actions aim to protect revenue and curb illegal trade, they also reflect the broader enforcement-first approach being adopted across tax and customs administration. For businesses, this underscores the importance of proper documentation, lawful sourcing, and compliance with customs regulations.
SUDDEN PROPERTY VALUATION HIKE, MARKET FREEZE, AND QUICK WITHDRAWAL BY FBR
FBR sharply increased official property valuation rates in Islamabad, with very large jumps in different sectors and DHA areas. These valuation rates are used to calculate taxes and duties on property sale and purchase, so when valuations rise suddenly, the tax cost also rises immediately. As a result, buyers and sellers paused property transfers because the tax impact became too heavy and uncertain, and the market activity almost stopped. After strong backlash from the business community and taxpayers, along with protests being announced, FBR issued a fresh notification and suspended the earlier valuation increase. This whole episode shows how sudden and unrealistic changes can create confusion, damage market confidence, and even reduce tax collection because transactions slow down.
TRANSPORTERS’ STRIKE DISRUPTED TRADE, KCCI DEMANDS WAIVER OF DEMURRAGE AND DETENTION CHARGES
During the nationwide goods transporters’ strike, cargo movement to and from Karachi Port and Port Qasim remained stuck for many days. Importers could not clear raw materials and essential inputs, while exporters faced shipment delays, possible order cancellations, and reputational issues with international buyers. Even though businesses were not responsible for the disruption, shipping lines and terminal operators continued charging demurrage (delay charges) and container detention (container holding charges), creating a heavy financial burden, especially for small and medium businesses already facing high costs. Due to this, KCCI requested the Ministry of Maritime Affairs to intervene and direct relevant stakeholders to waive, suspend, or substantially reduce these charges and support quick clearance of the backlog.
SINDH HIGH COURT VALUATION DIRECTION AND TOUGHER CUSTOMS ACTION ON MISDECLARATION
A customs valuation dispute relating to Chloroform was pending, where customs fixed different values based on packing mode (drums vs. ISO/Flexi tanks), and the importer argued that the higher valuation made the business uncompetitive. The Sindh High Court directed the Director General of Valuation to decide the matter within 90 days, after giving a proper hearing to the importer and other stakeholders, and to decide independently (without being influenced by the disputed addendum). This is important because customs valuation directly impacts duty and taxes, so delayed or unfair valuation rulings increase cost, create uncertainty, and disrupt business planning.
FBR ACHIEVES RECORD TAX RECOVERY OF RS. 874 BILLION THROUGH AGGRESSIVE ENFORCEMENT
FBR claims it recovered Rs 874 billion in FY 2024–25 by taking stronger enforcement actions than before. In simple terms, FBR is not only depending on taxpayers to “file and pay” voluntarily, it is actively identifying gaps, following up cases, and recovering amounts through different enforcement tools. This is being presented as a major jump compared to the previous year, which signals that tax enforcement is becoming stricter and more active across sectors.
ATIR ORDERS FBR TO STOP BACK-DATED UPLOADING AND EDITING OF ASSESSMENT ORDERS ON IRIS
The Appellate Tribunal raised a serious issue: an assessment order was allegedly changed after it was uploaded on IRIS. ATIR directed FBR to block back-dated uploading and replacement of orders using the same barcode. This is important because taxpayers should not face a situation where an order is modified later without a clear legal process. It strengthens the idea that the digital system must be fair, transparent, and tamper-proof.
GOODS TRANSPORTERS’ STRIKE CAUSES FACTORY CLOSURES, PORT BACKLOGS, AND SHORTAGES IN CITIES
The transport strike caused severe disruption: factories closed, containers remained stuck at ports, and essential items became difficult to move. Even charity goods (warm clothing consignments) were held up. In everyday terms: when goods stop moving, business losses rise, delivery timelines break, and prices can increase due to supply shortages and demurrage costs.
REAL-TIME MONITORING IN SUGAR & CEMENT SECTORS HELPS CATCH UNDER-REPORTED PRODUCTION
FBR introduced real-time monitoring systems to track production in sectors like sugar and cement. This means the government can compare what a factory produces versus what it reports as sales and tax. When production is tracked live, it becomes harder to hide output. For businesses, it shows that FBR is moving toward technology-based checks rather than relying only on paperwork and manual audits.
POS EXPANSION: RETAIL SALES NOW MORE VISIBLE TO FBR THAN BEFORE
FBR expanded Point-of-Sale (POS) integration to more than 40,000 installations, targeting large retailers. This matters because POS systems directly record sales, and FBR can use this data to verify whether sales reported in tax returns match actual sales. In common words: big retailers are increasingly being monitored through live sales data, and gaps can trigger notices or audits.
