Super Tax after Finance Act 2026: Thresholds, Rates and Export Exception

Full Article

A business with Rs. 600 million of section 4C income cannot calculate super tax only on the Rs. 100 million above the general threshold. Under the revised table, an ordinary person outside the three specified categories pays 8% of the income once it exceeds Rs. 500 million. On those assumptions, the amount is Rs. 48 million.

Which category applies?

• Banking companies: income exceeding Rs. 150 million carries 10% of the income.
• Persons whose income is computed under Part I of the Fifth Schedule: the Rs. 150 million threshold and 10% rate apply subject to the limit in rule 4 of that Part.
• Persons deriving income from sale of any kind of fertilizer: the table specifies income exceeding Rs. 150 million and a 10% rate.
• Other persons: income exceeding Rs. 500 million carries 8% of the income.

Use income as determined for section 4C; accounting profit or sales turnover is not automatically the correct tax base. The special sector categories must be considered before relying on the general threshold.

The export exception is strictly more than 80%

New clause 104B of Part IV of the Second Schedule disapplies section 4C where export proceeds realized for the tax year represent more than 80% of total turnover for that year. Exactly 80% does not satisfy that wording. Reconcile realized proceeds to bank evidence and total turnover before claiming the exception.

A useful working paper

Keep separate calculations for section 4C income, sector classification and the export ratio. Record why an exemption applies, rather than entering zero solely because the business exports some goods. Historical years and pending disputes need their own applicable-law review.

Legislation checked

Finance Act 2026, PDF pages 55-61. Source-text review: 14 October 2026. The Act generally commences on 1 July 2026, subject to express exceptions. Any required implementing notification must also be checked before applying a concession.

Avoiding the marginal-band mistake in super tax

Start by identifying the taxpayer category and computing income under section 4C. The revised table should not be treated like the ordinary salary slabs. Once the relevant threshold is exceeded, the stated percentage applies to the income as provided, not merely the excess illustrated in an ordinary progressive slab.

For the export exception, maintain a separate realized-proceeds-to-turnover reconciliation. Do not use the business name or the presence of some exports as evidence that the more-than-80% test is satisfied. Accounting profit, sales turnover and section 4C income each serve a different purpose.

Worked situation

On the assumptions in the ordinary-category example, Rs. 600 million of section 4C income at 8% gives Rs. 48 million. Using only the Rs. 100 million excess would give Rs. 8 million and would apply the wrong base. A banking or other specified-category case needs its own threshold/rate assessment.

Records to check

• Taxpayer category and section 4C income computation.
• Separate ordinary income-tax and super-tax workings.
• Realized export proceeds and total turnover if claiming the exception.

Frequently asked questions

Is turnover automatically the super-tax base?

No. Use income determined under section 4C.

Does exactly 80% satisfy the export exception?

The cited wording requires more than 80%.

Can the new table decide an old-year dispute?

Check the applicable year and law separately; do not apply current changes retrospectively without a legal basis.

Sources and period covered

• Finance Act 2026 (FBR) — Enacted federal amendments; check each provision’s commencement.
• Income Tax Ordinance 2001, updated 2026 (FBR) — Read the applicable section, schedule and amendment history.

Source check: 20 October 2026. Examples illustrate the stated assumptions; the applicable law, tax year and transaction records determine an individual result.