Business Recorder
KARACHI: The Karachi Tax Bar Association (KTBA) has demanded Federal Board of Revenue (FBR) to abolish the super tax and raise the annual tax-free threshold for the salaried class to Rs 1.2 million in the upcoming federal budget 2026-27. In its budget proposal submitted to the FBR, KTBA argued that the super tax, originally introduced under Section 4B for a single year and a specific purpose, has now been made open-ended and permanent without any sunset clause, a move the Bar calls “unjustified.” “The imposition of a super tax creates a disincentive for businesses to flourish,” KTBA’s budget proposal said, urging that its abolition or significant reduction would be a direct stimulus for the economy. READ MORE: Super tax payments: KTBA says concerned at ‘illegal’ surcharge proceedings against taxpayers At a time when Pakistan is struggling to attract foreign direct investment and retain domestic capital, business lobbies have consistently flagged high and unpredictable tax rates as a deterrent. The KTBA, in its proposals, said that salaried persons should be allowed 15 percent deductible allowance against salary income for his/her commute and other unavoidable expenses incurred to earn salary income, similar to what is allowed on rental income. Additionally, the annual tax-free threshold, currently set at Rs 600,000, should be doubled to Rs 1.2 million to reflect inflation over the past two to three years. The maximum marginal rate, presently 35 per cent, should be gradually brought down to 25 per cent. KTBA also proposed restoring tax credits for investment in shares, mutual funds, and health insurance under Sections 62 and 62A, which were eliminated in the Finance Act 2022, calling their removal “uncalled for”, particularly for the salaried class and small investors. The KTBA further demanded the removal of Section 7E, the tax on deemed income from immovable assets, from the statute book, with retrospective effect. The Bar said that the Federal Constitutional Court has already struck down this provision, and taxes paid under it should be treated as refundable. The continuation of a law already deemed unconstitutional must be corrected. The KTBA also requested a phased reduction of the corporate tax rate from the current 29 per cent, which rises to an effective 36 per cent when WWF and WPPF levies are added to 25 per cent, declining by one percentage point annually contingent on a 10 per cent increase in taxable income. For small companies, the Bar proposed a gradual reduction to 15 per cent. “The minimum turnover tax rate under Section 113, currently 1.25 percent, should also be scrapped for listed companies entirely and halved to 0.50 per cent for others,” the KTBA proposals said. Furthermore, the carry-forward period for unadjusted minimum tax, reduced to two years in the Finance Act 2025, should be restored to five years to provide adequate relief to companies going through difficult phases. The KTBA, in its 42 budget recommendations, strongly urged the FBR to scrap provisions that penalize compliant taxpayers for others’ non-compliance, and restore appeal stay periods to 180 days. The KTBA also sought relief for exporters, nonprofits, and industrial investors through reinstated tax credits. The Bar was of the view that Pakistan’s tax system discourages investment and documentation, calling for a fundamental reset toward internationally competitive rates and an effective, confidence-inspiring dispute resolution framework. Copyright Business Recorder, 2026
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