What happened
Pakistan’s Federal Constitutional Court (FCC) ruled on Monday, 17 August 2026, that companies can adjust tax credits accumulated under Section 168 of the Income Tax Ordinance against their super tax liability, setting aside an earlier Islamabad High Court (IHC) decision.
A two-judge bench led by FCC Chief Justice Aminuddin Khan heard the case, and Justice Aamer Farooq authored the six-page judgment, according to Independent Pakistan and ARY News. The appeal was filed by CM Pak Limited, the operator of the Zong mobile network.
The legal question
At issue was whether Section 4C, which governs the super tax imposed on Pakistan’s highest-earning sectors, allows a company to apply credits under Section 168 directly against what it owes, or whether it must instead seek a refund under Section 170. The IHC had rejected CM Pak’s position in an order dated 25 March.
Justice Farooq wrote that a tax credit under Section 168 is “a separate and established legal right”, and that forcing a taxpayer into the refund process by blocking adjustments ran contrary to the spirit of the law, ARY News reported. The judgment held that financial laws should be interpreted to benefit and facilitate the taxpayer.
Why it matters
The FCC set aside the IHC order and directed the Federal Board of Revenue (FBR) to review CM Pak’s adjustment claim in response to the notice that prompted the case. The FBR had issued the company a notice for payment of super tax.
Independent Pakistan reported that the decision could reshape how major corporations settle tax obligations, offering a legal template for other large taxpayers seeking to apply existing credits rather than wait on the refund process.
What is still uncertain
The adjustment claim still has to be decided by the tax authority, and it is not yet clear how the FBR will apply the ruling to other pending super tax cases or what the decision will mean for revenue already assessed.
Sources & reporting notes
This is a summary of published reporting, not independent reporting. Details and quoted remarks are as carried by the cited sources, which were reviewed on 17 August 2026.
- ARY News — "Constitutional court declares adjustment of tax credit against super tax legal"17 August 2026 · The verdict, Justice Aamer Farooq's six-page judgment, the Section 168 right and the FBR review order.
- Independent Pakistan — "Top court rules companies can offset super tax with existing credits"17 August 2026 · The bench led by Chief Justice Aminuddin Khan, the CM Pak/Zong appeal, the 25 March IHC order and Sections 4C, 168 and 170.
