Dr. Ikramul Haq
The short order of January 27, 2026 by the Federal Constitutional Court (FCC) of Pakistan validating super tax under sections 4B and 4C of the Income Tax Ordinance, 2001 has unsettled established constitutional jurisprudence governing the limits of parliamentary power to impose “taxes on income.”
Para 9 of the FCC’s short order seeks to bring finality to a long-running constitutional dispute, but instead leaves behind a trail of doctrinal confusion. In a few compressed propositions, the FFC unsettles settled principles of taxation, legislative competence, and fiscal federalism.
The short order concedes that Entry 47 of Part I of the Federal Legislative List contained in Fourth Schedule to the Constitution—taxes on income—stands exhausted through the charging provision of section 4 of the Income Tax Ordinance, yet immediately re-invokes the same entry to validate additional imposts under sections 4B and 4C.
It declares super tax to be an independent charge without locating its constitutional source, treats definitional expansion as a substitute for legislative authority, and implicitly allows multiple legislative entries to operate simultaneously within a single taxing framework.
Most strikingly, it endorses the re-characterisation of income—already taxed “from whatever source derived”—as a variable construct capable of repeated exactions under new labels. The cumulative effect is not constitutional clarity but constitutional drift, where exhaustion becomes reversible, entries lose their delimiting function, and fiscal expediency eclipses constitutional restraint.
Para 9(vii) of short order correctly acknowledges that Entry 47 of Part I of the Federal Legislative List stands exhausted through section 4 of the Income Tax Ordinance, 2001. Section 4 is the charging provision; it comprehensively brings to tax income “from whatever source derived.” This language is neither casual nor accidental. It reflects the classical understanding of income taxation as a single, unified charge operating on a comprehensive base.
Once Parliament has exercised its power under Entry 47 through a general charging section covering the entire field of income, the constitutional subject is consumed. Exhaustion is not rhetorical; it is doctrinal, rooted in the logic of enumerated powers.
Yet having made this admission, the short order contradicts itself by invoking the same Entry 47 to justify sections 4B and 4C. This reasoning collapses a fundamental distinction between the form of a tax and the constitutional nature of the tax base.
Constitutional entries speak to subject-matter, not fiscal technique. A surcharge, an additional rate, or a progressive slab does not alter the subject of taxation; it merely modulates the incidence of an existing charge.
A surcharge is not a separate tax base; it is an adjunct to an existing charge. It presupposes a valid tax and merely enhances the rate. Historically and jurisprudentially, a surcharge has always been understood as parasitic upon a principal levy.
Sections 4B and 4C, however, do not operate as adjuncts to section 4 of the Income Tax Ordinance, 2001. They create parallel charging mechanisms with separate thresholds, selective application, and independent legislative intent. They do not ride on section 4; they bypass it. Their operation is not contingent upon section 4 but proceeds alongside it.
If section 4 exhausts Entry 47, any further impost on income must be ancillary to section 4 or traceable to a different legislative entry. Sections 4B and 4C satisfy neither condition. To keep Entry 47 perpetually alive by changing labels empties the doctrine of exhaustion of meaning and converts a constitutional limit into a drafting inconvenience.
Para 9(v) of short order compounds this error by upholding the definition of “income” for purposes of section 4C “in so far as it includes income from all sources” and by setting aside the Islamabad High Court’s judgments that had read down the provision. This finding misconceives the constitutional role of a definition clause. Definitions do not confer legislative competence; they operate only within an already validly assumed power. They cannot enlarge, revive, or multiply constitutional authority.
Income from all sources was never in dispute—it has always been the subject of section 4 and has long been the hallmark of comprehensive income taxation. The real issue was whether income already comprehensively charged could again be subjected to a second impost through a separate charging section merely by invoking a broad definition.
By treating definitional breadth as constitutionally decisive, Para 9(v) allows Parliament to reopen a closed field. This reverses the constitutional hierarchy. Legislative entries define power; statutes exercise it. A statute cannot, through definitional drafting, resurrect a power already exhausted. To hold otherwise permits serial taxation of the same base through semantic engineering, where words replace limits and definitions substitute for authority.
The deeper flaw lies in what Paras 9(v) and 9(vii) jointly assume but never confront—that a single charging provision may simultaneously draw authority from multiple legislative entries, including Entry 47 (taxes on income), Entry 48 (taxes on corporations), and Entry 52 (Taxes and duties on the production capacity of any plant, machinery, undertaking, establishment or installation in lieu of the taxes and duties specified in entries 44, 47, 48 and 49 or in lieu of any one or more of them). This is constitutionally impermissible.
The Federal Legislative List is not a menu of interchangeable powers; each entry defines a distinct taxing field with its own subject, logic, and constitutional consequences. Income tax is not profession tax. Corporate taxation is not a free-floating category detached from income. While a statute may incidentally affect entities falling under different entries, a single charge cannot derive its validity from multiple entries at once without dissolving the discipline of enumeration.
Section 4C does precisely that. By taxing “income from all sources” while applying selectively to corporations and business entities, it straddles multiple entries without anchoring itself to any. This is not legislative flexibility; it is constitutional indeterminacy.
When the constitutional source of a charge cannot be clearly identified, the charge itself becomes constitutionally suspect. Legislative competence cannot be inferred from convenience; it must be demonstrated with precision.
The most destabilising element is the FFC’s acceptance that super tax is an independent charge. Once this assertion is made, the entire justificatory structure collapses. If super tax is independent, it cannot rely on section 4. If it relies on Entry 47, it violates exhaustion. If it relies on another entry, none authorises a tax on income in this form. An independent charge on income that is not anchored in Entry 47 is constitutionally homeless; one that is anchored in Entry 47 is constitutionally barred. There is no third option.
Once independence is conceded, all ancillary justifications fail. An independent charge must independently satisfy constitutional requirements relating to legislative competence, fiscal federalism, and the NFC framework governing divisible-pool taxes.
Sections 4B and 4C do none of these. Instead, they create a ring-fenced federal revenue stream under the guise of income taxation, undermining provincial entitlements without constitutional amendment or NFC consent. This bypass of fiscal federalism is not incidental; it is inherent in the design of the levy. It alters the vertical distribution of revenue without engaging the constitutional machinery meant to regulate such change. This is not a technical defect; it is a structural violation.
What the Islamabad High Court attempted—by reading down section 4C—was to preserve constitutional coherence by preventing double taxation of the same income through parallel charges. It recognised that definitional breadth cannot legitimize constitutional overreach. Para 9(v) discards this restraint and replaces it with a doctrine under which definitions trump entries, exhaustion is reversible, and independent charges need not identify their constitutional source. The result is not interpretation but erosion, not clarity but instability.
Taken as a whole, Para 9 produces a jurisprudence in which income becomes a malleable construct, legislative entries lose their delimiting function, and constitutional taxation drifts toward confiscation by statute. This is not merely an error in tax law; it is a breakdown in constitutional discipline. When courts permit Parliament to redefine income, multiply charges on the same base, and float between legislative entries without clear anchorage, enumerated powers become ornamental rather than operative.
This is the constitutional chaos now confronting tax jurisprudence in Pakistan. It is chaos not because the Constitution is unclear, but because its limits have been treated as optional. Review is therefore not an exercise in disagreement; it is an act of constitutional salvage. Without it, fiscal expediency will continue to masquerade as constitutional power, and taxation will cease to be a matter of law and become a matter of labels.
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Dr. Ikramul Haq, Advocate Supreme Court, Adjunct Faculty at Lahore University of Management Sciences (LUMS), member Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE), holds LLD in tax laws. He was full-time journalist from 1979 to 1984 with Viewpoint and Dawn. He also served Civil Services of Pakistan from 1984 to 1996.