Does super tax under section 4C apply to a partnership firm?

Super tax is not limited to companies. Section 4C charges it on the income of every person, which includes a partnership firm. After the Finance Act, 2026, the Table in Division IIB is short: most firms pay nothing under it unless their section 4C income passes Rs. 500 million, and then they pay 8% of that income.

What does the law say?

The charge. Section 4C(1) says a super tax “shall be imposed for tax year 2022 and onwards at the rates specified in Division IIB of Part I of the First Schedule, on income of every person”. The only carve-out in the section itself is for a banking company in tax year 2022.

What “income” means. Section 4C(2) defines income for super tax as the sum of:

• (i) profit on debt, dividend, capital gains, brokerage and commission;
• (ii) taxable income, other than brought forward depreciation and brought forward business losses, excluding amounts already in clause (i);
• (iii) imputable income as defined in the Ordinance, excluding amounts in clause (i); and
• (iv) income computed under the Fourth, Fifth, Seventh and Eighth Schedules, other than brought forward depreciation, amortization and business losses.

So the base is wider than a firm’s taxable income. Brought forward losses and depreciation do not reduce it, and income taxed under separate regimes, such as capital gains and profit on debt, is added in.

Payment. Section 4C(3) says the super tax is paid on the date and in the manner specified in section 137(1), and all of Chapter X applies. Section 137(1) makes tax due on the due date for furnishing the return for that year.

What are the rates for tax year 2027?

The Finance Act, 2026 replaced the banded Table in Division IIB with this one:

S. No.	Income under section 4C and person	Rate of tax
1	Income of a banking company exceeding Rs. 150 million	10% of the income
2	Income of a person computed under Part I of the Fifth Schedule, exceeding Rs. 150 million, so far as it does not exceed the limit in rule 4 of that Part	10% of the income
3	Income of a person engaged in deriving income from sale of any kind of fertilizer, exceeding Rs. 150 million	10% of the income
4	Income of a person other than those in S. No. 1, 2 and 3, exceeding Rs. 500 million	8% of the income

A typical trading, manufacturing or professional firm falls in S. No. 4. The old graduated bands, which started at 1% above Rs. 150 million, now appear only in the footnote as the superseded Table.

Exporters. Clause (104B) of Part IV of the Second Schedule, inserted by the Finance Act, 2026, says section 4C does not apply to a person if the export proceeds realized for the tax year are more than eighty percent of its total turnover for the year.

Worked example (illustrative figures)

Qureshi and Sons, a large edible oil trading firm in Karachi, has the following for tax year 2027:

• Taxable business income before brought forward losses: Rs. 490,000,000
• Profit on debt from bank deposits: Rs. 30,000,000
• Brought forward business loss from an earlier year: Rs. 40,000,000

1. Clause (i) income: profit on debt of Rs. 30,000,000.
2. Clause (ii) income: taxable income ignoring the brought forward loss, Rs. 490,000,000.
3. Section 4C income: Rs. 490,000,000 + Rs. 30,000,000 = Rs. 520,000,000. The Rs. 40,000,000 brought forward loss is not deducted.
4. The firm is not a bank, not a Fifth Schedule person and not a fertilizer seller, so S. No. 4 applies.
5. Income exceeds Rs. 500 million, so the rate is 8% of the income.
6. Super tax: Rs. 520,000,000 x 8% = Rs. 41,600,000.

If the same firm’s section 4C income had been Rs. 480,000,000, S. No. 4 would not reach it, and the Table sets no rate for it.

What if …?

What if income is only slightly above Rs. 500 million? S. No. 4 is printed as “8% of the income” once the income exceeds Rs. 500 million. The Table does not contain a marginal relief rule, and the text does not say whether 8% is meant to apply only to the excess. Read literally, a firm just over the line pays 8% on all of its section 4C income.

What if the firm is also paying minimum tax? An Explanation to section 113(1) excludes tax under section 4C from “tax payable or paid” when testing the minimum tax floor. Super tax and minimum tax are therefore worked out separately.

What if the firm’s income is mostly export sales? If realized export proceeds exceed eighty percent of total turnover for the year, clause (104B) takes the firm outside section 4C for that year.

Common mistakes

• Assuming partnerships are exempt. Section 4C(1) says “every person”.
• Using the old bands. The 1% to 10% bands for incomes from Rs. 150 million upwards were replaced for other persons by the single S. No. 4 entry.
• Deducting brought forward losses. Section 4C(2) excludes them from the reduction.
• Leaving out separately taxed income. Profit on debt, dividends and capital gains are part of section 4C income under clause (i).

What to check in the official text

Read section 4C in full, including sub-sections (3) to (5A) on payment and recovery. The Division IIB Table does not appear in the site text, so check it in the official PDF, where it is printed with the superseded Table in the footnotes. Read clause (104B) of Part IV of the Second Schedule if the firm exports. Tax on a partner’s share of firm income is a separate question covered on other pages.