The Supreme Court rejected on Monday the Federal Board of Revenue’s (FBR) appeals regarding additional taxes on the salaried class, with Chief Justice Umar Ata Bandial observing that the justification providing for placing additional tax on the salaried class was not clear.

The chief justice was heading a three-member bench of the top court that heard the appeals related to additional tax on the salaried class. Justice Qazi Faez Isa and Justice Mansoor Ali Shah were the other two judges on the bench.

The FBR counsel, Additional Attorney General Aamir Rehman and other parties appeared before the court.

Justice Mansoor Ali Shah rebuked the FBR lawyers and questioned the logic behind a 30 per cent tax on those earning Rs 1 million in the corporate sector? “Why is there discrimination on taxation?”

Justice Qazi Faez Isa inquired why there was no 30% tax on lawyers and businessmen who take 1 million fees. “Many people in Pakistan earn more than a million. You should tax all of them even if the tax rate is 90 per cent but do not discriminate when imposing taxes.”

FBR’s counsel replied that additional tax was levied only on bonus.

Justice Mansoor Ali Shah asked why the bonus was not considered a part of the income and inquired why it was taxed separately.

The lawyers informed the court that the bonus is part of the income.

On the issue of taxing it separately, the additional attorney general said that it is the prerogative of the government to determine what to tax and how much.

Justice Mansoor Ali Shah remarked that if the company earns profit, it gives bonus. “You did not take tax from the company but you will take it from the employee,” he observerd.

When the additional attorney general adopted the stance of imposing corporate sector tax, Justice Shah asked the definition of corporate sector. He responded that there was none.

The CJP said that the court was not satisifed with the justification provided for imposing additional tax on the salaried class and dismissed the appeals.

Earlier this year, the government caved to International Monetary Fund’s (IMF) demand and passed on the burden of Rs80 billion on the salaried class by increasing their tax rates.

It has set the minimum income tax rate of 2.5% for those earning up to Rs100,000 a month as well as a maximum of 35% on the monthly income of over Rs1 million, according to the proposed amendments to the Finance Bill 2022.