Super Tax Abolished for Income Up to Rs 500 Million in Budget 2026-27

A headline relief in Budget 2026-27

One of the most welcome measures in the Finance Act 2026 (Federal Budget 2026-27), effective 1 July 2026, is the abolition of super tax for income up to Rs 500 million. Super tax is a levy charged on top of ordinary income tax under the Income Tax Ordinance 2001 and it had become a real burden for many profitable companies and high-income persons. Removing it below the Rs 500 million mark gives them direct relief.

What exactly changed

• Income up to Rs 500 million: super tax is now abolished, so nothing is payable on this band.
• Income above Rs 500 million: the rate is reduced from 10% to 8% (covered in detail in our companion article).

Together, the two changes lower the effective tax burden across the board, with the largest proportional benefit going to companies whose income sits below the Rs 500 million line.

Who benefits most

The abolition is especially significant for mid-sized and growing enterprises whose taxable income previously crossed the super tax entry point but remains under Rs 500 million. For these businesses, the change frees up money for expansion, hiring, technology and working capital.

An important caveat: some sectors are excluded

The concession does not apply uniformly. Under the Finance Act 2026, the banking, exploration and production (E&P), and fertilizer sectors do not get the same benefit and continue to face full super tax treatment. If your company operates in these sectors, plan on the basis of the existing super tax exposure rather than the relief.

What this means for tax planning

For eligible companies, the abolition simplifies projections and improves after-tax margins. Finance teams should:

• Re-forecast effective tax rates for the year now that super tax falls away below Rs 500 million.
• Confirm whether the business sits in an excluded sector before booking the saving.
• Revisit dividend, reinvestment and capital allocation decisions in light of higher retained earnings.

Keep your numbers aligned with Zaffre Axon

A tax forecast is only as good as the payroll, invoice and finance data behind it. Zaffre Axon, from Zaffre Tech, keeps that data in one place and applies FBR slabs, allowance taxability, EOBI, sales tax and withholding across the business. When a budget measure like the super tax abolition takes effect, your figures stay consistent and your finance team can work out the impact properly. Zaffre HRM keeps payroll compliant while Zaffreaxon keeps the wider finance picture aligned, all centrally configured.

With Zaffretech as your compliance backbone, you spend less time reconciling and more time planning around relief measures like this one.

References: Income Tax Ordinance 2001; Finance Act 2026 (Federal Budget 2026-27); FBR super tax provisions.

Planning around Budget 2026-27? Book a demo of Zaffre Axon.