Karachi: A major taxpayers’ body has lodged a formal complaint with Finance Minister Muhammad Aurangzeb, alleging that field formations of the Federal Board of Revenue are illegally harassing taxpayers while enforcing Section 4C of the Income Tax Ordinance, 2001.
In a letter dated February 16, 2026, the representative body of the tax fraternity claimed they have received numerous complaints from District Tax Bar Associations across Pakistan regarding what they term as abuse and excessive exercise of authority by FBR officials.
The provision deals with Super Tax collection, and according to the taxpayers’ body, a plain reading of the law shows that Super Tax should be collected strictly based on the declaration filed by the taxpayer. They argue that the law does not give tax collectors any authority to start independent proceedings to change or reassess a taxpayer’s income.
The letter highlights several illegalities being committed by field formations, including the disallowance of current year depreciation, where FBR officials are reportedly treating current year depreciation as an inadmissible deduction when computing taxable income for Super Tax, even though the law clearly excludes only brought forward depreciation from previous years and not depreciation from the current tax year.
Another issue raised is the wrong treatment of minimum tax cases, where field formations are applying imputable income rules meant for final tax regime cases to minimum tax regime cases, which is incorrect under the law. The taxpayers’ body has cited specific sections of the Income Tax Ordinance to support their stance on this matter.
Perhaps most significantly, the letter alleges that tax officials are including exempt income and amounts on which no tax is payable under the Second Schedule of the Ordinance when calculating Section 4C liability, which amounts to unlawfully enlarging the scope of the law. The complaints come in the wake of a short order passed by the honorable Federal Constitutional Court in Civil Appeal No.1243 of 2020 and related cases dated January 27, 2026.
According to the taxpayers’ body, FBR’s actions are contrary to both the statutory mandate and the spirit of this court order. The letter also points out that statutory notices under Section 4C are being reflected in the IRIS portal under the Completed Task tab against the Declaration, without providing any mechanism for taxpayers to seek extensions of time or arrange financial resources to discharge the alleged liability.
Sheikh Ahsan Ul Haq, President of the body, and Tahir Mahmood Butt, General Secretary, have requested the Finance Minister to take immediate notice of the issue and issue necessary instructions to field formations to act judicially. The letter warns that the current practices are not only arbitrary but also violate due process requirements and the principles of fairness and natural justice guaranteed under the Constitution.