ISLAMABAD: The corporate sector has expressed serious concern over the Federal Board of Revenue’s (FBR) ‘aggressive’ recovery drive by issuing coercive notices and raising erroneous tax demands of Super Tax, creating unnecessary hardship to compliant companies and businessmen. This has been alleged by Lahore Tax Bar Association (LTBA) in a letter addressed to Chairman Federal Board of Revenue (FBR). According to LTBA, we, on behalf of the Lahore Tax Bar Association (LTBA) and taxpayers writing this letter to draw FBR’s urgent attention to the serious difficulties, uncertainty, and widespread anxiety currently being faced by taxpayers in the aftermath of the recent short order passed by the Federal Constitutional Court in relation to Super Tax under section 4C of the Income Tax Ordinance, 2001, introduced through the Finance Act, 2022. READ MORE: LTBA points out collective ‘systematic failures’ in FBR While the short order has reportedly decided the constitutional challenge in favour of the tax authorities, it is respectfully submitted that the detailed judgment has not yet been made public. Despite this, the field formations have initiated an aggressive recovery drive, issuing coercive notices and raising demands that are not only premature but, in many cases, patently erroneous, arbitrary, and without lawful basis, LTBA said. It said tax officials are adding the entire balance of unabsorbed depreciation carried forward to income for the purposes of Section 4C. This is a clear misreading of Section 4C (2) (ii), which only permits the addition of that portion of unabsorbed depreciation actually set off against current year taxable income, and not depreciation merely available for future adjustment. Such treatment is contrary to the scheme of the Ordinance and settled principles of income computation. It said in numerous cases, withholding taxes and advance tax payments duly made by taxpayers for the relevant tax year have been completely ignored, resulting in artificially inflated demands. Taxpayers are then pressed to make immediate payments without adjustment of taxes already lying with the department, causing unnecessary financial and operational strain. It has also been observed that recovery notices are being issued for substantial amounts of super tax without any transparent computation, and without apparent reconciliation with figures disclosed in filed returns or audited financial statements submitted to FBR. More importantly, the initiation of recovery proceedings at this stage raises a serious legal concern. In the absence of the detailed FCC judgment, taxpayers are effectively deprived of their statutory and constitutional right to examine the reasoning of the Court and to determine whether grounds exist for filing a review or reference application, as may be advised. Commencing recovery without allowing reasonable time for such recourse is contrary to the principles of natural justice, due process, and fair play and renders the recovery action legally vulnerable. This approach is unfortunately leading to avoidable disputes, increased litigation, and erosion of trust between compliant taxpayers and the tax administration, while simultaneously diverting the time and resources of FBR, tax professionals, and businesses away from productive economic activity, LTBA said. In view of the above, we respectfully request that the Ministry of Finance and FBR may be pleased to direct the field formations to refrain from coercive recovery proceedings under section 4C until the detailed FCC judgment is issued and taxpayers are afforded reasonable time to seek appropriate legal remedies. It asked to issue clear and binding instructions on the correct methodology for computation of super tax under section 4C, strictly in accordance with the law including proper adjustment of taxes already paid. It demanded for a restraint and proportionality in enforcement actions so as to avoid arbitrary demands and unnecessary hardship to compliant taxpayers. It further asked to consider issuance of a clarification circular to ensure uniform application of section 4C across the country and to prevent avoidable litigation. The LTBA is confident that FBR Chairman’s timely intervention will help restore transparency, legality and fairness in the administration of section 4C, safeguard taxpayer confidence, and save the revenue authorities from a flood of unnecessary disputes and litigation, while enabling recovery of undisputed and lawfully determined dues, LTBA added. Copyright Business Recorder, 2026