The Super Tax shall be collected on capital gains on the disposal of certain securities through the National Clearing Company of Pakistan Limited (NCCPL).
While explaining the Finance Bill 2023, a tax expert told ProPakistani that the Capital gains on the disposal of certain securities are subjected to tax collection by the National Clearing Company of Pakistan Limited (NCCPL). As such, Super Tax was required to be paid by persons earning such income along with their annual tax return.
It is now proposed that Super Tax shall also be collected on capital gains on disposal of such securities under the Eighth Schedule through NCCPL.
Tax experts further stated that the Super tax under section 4C as introduced through the Finance Act, 2022 envisaged payment of such tax along with the return. In order to enable the collection of such super tax as advance tax, enabling amendments have been made in sections 4C and 147. The amendments shall take effect from July 1, 2023.
Through Finance Act 2022, the Government introduced the concept of a Super tax on high-earning persons to be paid at the time of filing tax returns. Slab-wise rates were prescribed for the tax year 2022 with a maximum rate of 4 percent. With regard to certain specified sectors, an enhanced rate of 10 percent was prescribed for the tax year 2022 only and for banking companies, a 10 percent super tax was to be applicable for the tax year 2023.
In relation to the retrospective application of super tax for the tax year 2022 and the enhanced rate applicable for specified sectors, Constitution Petitions were filed before different High Courts. The High Court of Sindh held the same to be inapplicable for the tax year 2022 and enhanced rate for certain specified sectors in excess of 4 percent was declared ultra vires being discriminatory. The said decision is currently subjudice before the Supreme Court.
The Finance Bill 2023 has proposed to introduce new slab rates for super tax for taxpayers having income in excess of Rs. 300 million. As a result, the highest slab rate of 10 percent will be applicable to taxpayers from all sectors having income in excess of Rs. 500 million, thus, eliminating the discrimination.
When the provisions of Super Tax were introduced through Finance Act, 2022, it was mentioned that an enhanced rate of 10% for specified sectors was one-time, and thereafter the maximum rate of 4 percent was prescribed.
Now with the above-amended info, it is evident that the maximum rate of super tax has been enhanced to 10 percent besides being extended to all taxpayers having income exceeding Rs. 500 million irrespective of their sector for the tax year 2023 and onwards. The expert added that this has translated into a perpetual enhancement of the effective tax rate for all such taxpayers.
