Commercial entities can adjust their super tax liability against tax credits, rules FCC

Dawn reported that the Federal Constitutional Court (FCC) has allowed businesses to set off super tax dues against tax credits on Monday. The bench of Chief Justice Aminuddin Khan and Justice Aamer Farooq heard an appeal from CM Pak Limited, a Chinese telecom operator, which had challenged an Islamabad High Court (IHC) decision of March 25, 2026 that rejected a similar petition. The top court set aside the IHC order and sent any adjustment claim back to the competent taxing authority under the Income Tax Ordinance (ITO).

The dispute began when the Federal Board of Revenue (FBR) issued a notice on February 9, 2026, demanding super tax after the levy was upheld. The company argued that it held excess tax deducted at source worth Rs2.2 billion for tax year 2022, which should be offset against the super tax, but the FBR declined that request. The court held that a tax credit under Section 168 is distinct from a refund under Section 170, which requires an application before the Commissioner.

Justice Farooq, who wrote the judgement, said the law incorporates the full Chapter X regime, including tax credit provisions, rather than only its procedural elements. He added that the court cannot read in a limitation that Parliament never imposed. The actual adjustment amount will now be determined by the taxing authority.