Islamabad High Court seeks federal government response to 7% withholding tax hike on goods transportation.

The Islamabad High Court has requested answers from the federal government and the Federal Board of Revenue after a petition challenged a 7% withholding tax on goods transportation, up from 6%, introduced by the Finance Act 2026. The petition, filed by Advocate Kashif Ali Malik for I.S. Enterprises and Shaheen Freight Services, argued that the tax increase is discriminatory. Counsel noted that oil tanker contractors, which also use similar freight vehicles, are taxed at only 2% under the Second Schedule of the Income Tax Ordinance. Petitioners also pointed out that no publicly available economic impact assessment was conducted to justify raising the tax for other freight operators. They cited the historical concession granted to oil tanker operators due to the potential impact of strikes on national fuel supplies. After hearing the preliminary arguments, the division bench of Justices Khadim Hussain Soomro and Muhammad Asif issued notices to the federal government, the FBR and the Attorney General of Pakistan. The court set a further hearing for September 17. The Finance Act 2026 widened the scope of the withholding tax to 7% for various services, including courier, logistics, hotel, transport, air cargo, car rental, human resource outsourcing and oil drilling, marking a change from the earlier 6% rate.