<![CDATA[Pak Tax Forums - Constitution and Other Non-Tax Laws نان ٹیکس اور آئین]]> https://board.taxportal.pk/ Wed, 03 Jun 2026 18:26:30 +0000 MyBB <![CDATA[Retirement (PF Gratuity) and Other Employee Benefits]]> https://board.taxportal.pk/showthread.php?tid=49 Tue, 02 Dec 2025 07:26:56 +0100 HA_Law_Graduate]]> https://board.taxportal.pk/showthread.php?tid=49 For any private company in Islamabad, understanding which employee benefits mandatory are is a critical point of compliance. The answer is complicated because there isn't one single "labor law." Instead, a company's obligations are determined by a mix of different laws which are listed. This article breaks down the relevant laws and provides a clear, tiered guide based on the number of your employees.
The Relevant Laws for Islamabad (ICT)
Different laws apply to companies of different sizes when it comes to employee benefits. For businesses in the Islamabad Capital Territory (ICT), the compliance framework is primarily built from these four key pieces of legislation:  
  1. The Employees' Old-Age Benefits Act, 1976 (EOBI): This is the federal law for employee pensions.  
  2. The Provincial Employees' Social Security Ordinance, 1965 (ESSI): In the capital, this is administered by the ICT Employees Social Security Institution (IESSI) and covers health and cash benefits for employees.  
  3. The West Pakistan Shops & Establishments Ordinance, 1969: This law governs the basic working conditions (like leave and termination notice) for smaller businesses.  
  4. The Industrial and Commercial Employment (Standing Orders) Ordinance, 1968: This is the stricter law that applies to larger, more established companies. It is the law that makes Gratuity and Group Insurance mandatory.  
The most important concept to understand is the "two-law system" for general employment:
  • Companies with 1 to 19 employees are governed by the 1969 Shops & Establishments Ordinance. This law provides basic protections but does not include a legal requirement to pay Gratuity.  
  • When a company hires its 20th employee, it crosses a legal threshold. The 1968 Standing Orders Ordinance kicks in, and this law replaces many of the rules of the 1969 ordinance, imposing stricter obligations: most notably, mandatory Gratuity.  
Benefits by Company Size: A Tiered Compliance Guide
Here is a simple breakdown of what is applicable, and what is not, based on the number of people you employ.
Tier 1: The Micro-Enterprise (1-4 Employees)
At this stage, your business is governed by the 1969 Shops & Establishments Ordinance for basic terms, but the major statutory benefit schemes do not apply.
  • Social Security (IESSI): Not Mandatory.
  • EOBI (Pensions): Not Mandatory.
  • Gratuity / Provident Fund: Not Mandatory.
  • Group Life Insurance: Not Mandatory.
  • What is required: You must still follow the 1969 Ordinance for basic rules like working hours, annual leave, and providing a written termination notice.  
Tier 2: The Small Business (5-9 Employees)
This is the first major step-up in compliance and the source of the EOBI debate.
  • Social Security (IESSI): Mandatory. This is the first scheme that applies. Once you hire your 5th employee, you are generally required to register with IESSI for employee health and social security benefits.  
  • EOBI (Pensions): Optional. For years, the rule was 5+ employees. However, a 2021 government reform (F081) exempted micro/small organizations (5-9 employees) from mandatory registration to ease the burden on small businesses. You can still register voluntarily, but it is no longer a legal obligation at this size.  
  • Gratuity / Provident Fund: Not Mandatory. The 1969 Ordinance still applies.
Tier 3: The Growing Business (10-19 Employees)
This is the tier where the pension obligation becomes mandatory.
  • Social Security (IESSI): Mandatory.
  • EOBI (Pensions): Mandatory. The exemption for 5-9 employees ends. At 10 or more employees, registration with EOBI is a legal requirement. This aligns with the original 1976 Act and current official EOBI policy.  
  • Gratuity / Provident Fund: Not Mandatory. You are still governed by the 1969 Ordinance, which does not mandate this benefit.  
Tier 4: The Established Company (20+ Employees)
This is the most significant jump in legal obligations, as you now fall under the 1968 Standing Orders Ordinance.  
  • Social Security (IESSI): Mandatory.
  • EOBI (Pensions): Mandatory.  
  • Gratuity / Provident Fund: Mandatory. This is the "benefits cliff." The 1968 Ordinance legally requires you to pay a gratuity to eligible employees. The law states you are exempt from paying gratuity only if you have a Provident Fund where the employer's contribution is equal to or greater than the employee's contribution.  
  • Group Life Insurance: Mandatory. This is also triggered by the 1968 Ordinance (Standing Order 10-B). The threshold is 20+ employees for commercial establishments (like offices or shops) and 50+ for industrial establishments.  
 ]]> For any private company in Islamabad, understanding which employee benefits mandatory are is a critical point of compliance. The answer is complicated because there isn't one single "labor law." Instead, a company's obligations are determined by a mix of different laws which are listed. This article breaks down the relevant laws and provides a clear, tiered guide based on the number of your employees.
The Relevant Laws for Islamabad (ICT)
Different laws apply to companies of different sizes when it comes to employee benefits. For businesses in the Islamabad Capital Territory (ICT), the compliance framework is primarily built from these four key pieces of legislation:  
  1. The Employees' Old-Age Benefits Act, 1976 (EOBI): This is the federal law for employee pensions.  
  2. The Provincial Employees' Social Security Ordinance, 1965 (ESSI): In the capital, this is administered by the ICT Employees Social Security Institution (IESSI) and covers health and cash benefits for employees.  
  3. The West Pakistan Shops & Establishments Ordinance, 1969: This law governs the basic working conditions (like leave and termination notice) for smaller businesses.  
  4. The Industrial and Commercial Employment (Standing Orders) Ordinance, 1968: This is the stricter law that applies to larger, more established companies. It is the law that makes Gratuity and Group Insurance mandatory.  
The most important concept to understand is the "two-law system" for general employment:
  • Companies with 1 to 19 employees are governed by the 1969 Shops & Establishments Ordinance. This law provides basic protections but does not include a legal requirement to pay Gratuity.  
  • When a company hires its 20th employee, it crosses a legal threshold. The 1968 Standing Orders Ordinance kicks in, and this law replaces many of the rules of the 1969 ordinance, imposing stricter obligations: most notably, mandatory Gratuity.  
Benefits by Company Size: A Tiered Compliance Guide
Here is a simple breakdown of what is applicable, and what is not, based on the number of people you employ.
Tier 1: The Micro-Enterprise (1-4 Employees)
At this stage, your business is governed by the 1969 Shops & Establishments Ordinance for basic terms, but the major statutory benefit schemes do not apply.
  • Social Security (IESSI): Not Mandatory.
  • EOBI (Pensions): Not Mandatory.
  • Gratuity / Provident Fund: Not Mandatory.
  • Group Life Insurance: Not Mandatory.
  • What is required: You must still follow the 1969 Ordinance for basic rules like working hours, annual leave, and providing a written termination notice.  
Tier 2: The Small Business (5-9 Employees)
This is the first major step-up in compliance and the source of the EOBI debate.
  • Social Security (IESSI): Mandatory. This is the first scheme that applies. Once you hire your 5th employee, you are generally required to register with IESSI for employee health and social security benefits.  
  • EOBI (Pensions): Optional. For years, the rule was 5+ employees. However, a 2021 government reform (F081) exempted micro/small organizations (5-9 employees) from mandatory registration to ease the burden on small businesses. You can still register voluntarily, but it is no longer a legal obligation at this size.  
  • Gratuity / Provident Fund: Not Mandatory. The 1969 Ordinance still applies.
Tier 3: The Growing Business (10-19 Employees)
This is the tier where the pension obligation becomes mandatory.
  • Social Security (IESSI): Mandatory.
  • EOBI (Pensions): Mandatory. The exemption for 5-9 employees ends. At 10 or more employees, registration with EOBI is a legal requirement. This aligns with the original 1976 Act and current official EOBI policy.  
  • Gratuity / Provident Fund: Not Mandatory. You are still governed by the 1969 Ordinance, which does not mandate this benefit.  
Tier 4: The Established Company (20+ Employees)
This is the most significant jump in legal obligations, as you now fall under the 1968 Standing Orders Ordinance.  
  • Social Security (IESSI): Mandatory.
  • EOBI (Pensions): Mandatory.  
  • Gratuity / Provident Fund: Mandatory. This is the "benefits cliff." The 1968 Ordinance legally requires you to pay a gratuity to eligible employees. The law states you are exempt from paying gratuity only if you have a Provident Fund where the employer's contribution is equal to or greater than the employee's contribution.  
  • Group Life Insurance: Mandatory. This is also triggered by the 1968 Ordinance (Standing Order 10-B). The threshold is 20+ employees for commercial establishments (like offices or shops) and 50+ for industrial establishments.  
 ]]> <![CDATA[Notice & Summons (Courts vs Tribunal)]]> https://board.taxportal.pk/showthread.php?tid=33 Thu, 11 Sep 2025 08:37:34 +0200 HA_Law_Graduate]]> https://board.taxportal.pk/showthread.php?tid=33 1-    Civil Courts:
In a civil case in Pakistan, proceedings start when the plaintiff files a plaint, upon which the court issues summons to the defendant under Order V of the Civil Procedure Code (CPC). The summons, which serves as formal notice, may be delivered through personal service by a process server (bailiff), registered post with acknowledgment due (AD), or courier/electronic means if permitted by the court. If these methods fail, the court may order substituted service, such as publication in a widely circulated newspaper under Order V Rule 20. Once served, the defendant is required to appear and file a written statement in response to the claims. A special feature of this process is that the defendant must be given reasonable time before the hearing, since strict adherence to service rules is essential for the maintainability of any decree. If the defendant appears and contests, the matter proceeds to trial; but if they fail to respond despite proof of proper service, the court may proceed ex-parte and decide the case based on the plaintiff’s evidence.
 
2-    Criminal Courts:
In criminal cases in Pakistan, proceedings usually begin with the registration of an FIR or the filing of a complaint, after which the court issues summons or warrant under the Code of Criminal Procedure (CrPC). Summons may be served through personal delivery by a serving officer (sections 68–74 CrPC), while notices to witnesses may also be sent by registered post. If the accused absconds or avoids service, the court may order proclamation proceedings under sections 87–89 CrPC, which involve publication in a newspaper and affixation of the notice on the accused’s residence. The accused is required to appear before the court to answer the charges, seek bail, or contest the case. A special feature of criminal procedure is that service is applied more strictly than in civil cases, to safeguard the liberty of the accused. If the accused still fails to appear despite due service, the court may issue bailable or non-bailable warrants, attach property, and in some cases proceed against the accused in absentia as permitted by law.
 
3-    Tax Authorities/Tribunals:
In tax matters in Pakistan, proceedings usually start when the tax authority issues a show-cause notice, assessment order, or when a taxpayer files an appeal before a tribunal under the Income Tax Ordinance, 2001 or other fiscal statutes. The notice mechanism includes service by registered post or courier (section 218 ITO), electronic service through the IRIS portal, and if these remain unserved, by affixation at the taxpayer’s last known address. A key special feature here is that tax tribunals are independent quasi-judicial bodies meant to resolve disputes and ensure accountability of the tax authority, and unlike civil courts under the CPC, service is deemed valid once dispatched to the taxpayer’s registered address, without requiring personal delivery. The taxpayer must then respond by filing a reply or appearing for hearing; if they fail to do so despite valid service, the tribunal may proceed ex parte and decide the matter on record, which can result in assessment of additional tax, penalties, or enforcement of recovery.
 
4-    Banking Courts:
In the Banking Courts of Pakistan, proceedings start when a financial institution files a recovery suit under the Financial Institutions (Recovery of Finances) Ordinance, 2001. The court then issues summons to the defendant, which may be served through courier, registered post, or bailiff, and if these fail, substituted service through publication in newspapers may be ordered. The defendant is required to file a written statement within the prescribed period, usually 30 days, to admit or contest liability. A special feature of this system is that banking suits are summary in nature, where expedited service of notice is emphasized to prevent delay in recoveries, and in certain cases High Courts also exercise jurisdiction as Banking Courts. If the defendant appears, the matter proceeds to trial; however, if they fail to respond despite valid service, the court may proceed ex-parte and pass a decree in favor of the financial institution, which can then be swiftly executed through attachment and sale of the debtor’s property.
 
5-    Consumer Courts
In the Consumer Courts of Pakistan, proceedings begin when a consumer files a written complaint under the provincial Consumer Protection Act. Once admitted, the court issues summons to the opposite party, which are commonly served through registered post with acknowledgment due (AD) or courier service, and if these remain un-served, by affixation at the respondent’s premises. A key special feature is that consumer laws stress quick and summary disposal of cases, so service is usually affected by post or courier with less reliance on bailiffs to avoid delays. The accused party is required to appear and submit a reply within the given time; if they contest, the matter proceeds with evidence and hearings. However, if they fail to respond despite valid service, the Consumer Court may proceed ex-parte and pass an order in favor of the complainant, which may include directions for refund, replacement, compensation, or penalties.

.docx Tabular Representation.docx Size: 18.25 KB  Downloads: 0
]]> 1-    Civil Courts:
In a civil case in Pakistan, proceedings start when the plaintiff files a plaint, upon which the court issues summons to the defendant under Order V of the Civil Procedure Code (CPC). The summons, which serves as formal notice, may be delivered through personal service by a process server (bailiff), registered post with acknowledgment due (AD), or courier/electronic means if permitted by the court. If these methods fail, the court may order substituted service, such as publication in a widely circulated newspaper under Order V Rule 20. Once served, the defendant is required to appear and file a written statement in response to the claims. A special feature of this process is that the defendant must be given reasonable time before the hearing, since strict adherence to service rules is essential for the maintainability of any decree. If the defendant appears and contests, the matter proceeds to trial; but if they fail to respond despite proof of proper service, the court may proceed ex-parte and decide the case based on the plaintiff’s evidence.
 
2-    Criminal Courts:
In criminal cases in Pakistan, proceedings usually begin with the registration of an FIR or the filing of a complaint, after which the court issues summons or warrant under the Code of Criminal Procedure (CrPC). Summons may be served through personal delivery by a serving officer (sections 68–74 CrPC), while notices to witnesses may also be sent by registered post. If the accused absconds or avoids service, the court may order proclamation proceedings under sections 87–89 CrPC, which involve publication in a newspaper and affixation of the notice on the accused’s residence. The accused is required to appear before the court to answer the charges, seek bail, or contest the case. A special feature of criminal procedure is that service is applied more strictly than in civil cases, to safeguard the liberty of the accused. If the accused still fails to appear despite due service, the court may issue bailable or non-bailable warrants, attach property, and in some cases proceed against the accused in absentia as permitted by law.
 
3-    Tax Authorities/Tribunals:
In tax matters in Pakistan, proceedings usually start when the tax authority issues a show-cause notice, assessment order, or when a taxpayer files an appeal before a tribunal under the Income Tax Ordinance, 2001 or other fiscal statutes. The notice mechanism includes service by registered post or courier (section 218 ITO), electronic service through the IRIS portal, and if these remain unserved, by affixation at the taxpayer’s last known address. A key special feature here is that tax tribunals are independent quasi-judicial bodies meant to resolve disputes and ensure accountability of the tax authority, and unlike civil courts under the CPC, service is deemed valid once dispatched to the taxpayer’s registered address, without requiring personal delivery. The taxpayer must then respond by filing a reply or appearing for hearing; if they fail to do so despite valid service, the tribunal may proceed ex parte and decide the matter on record, which can result in assessment of additional tax, penalties, or enforcement of recovery.
 
4-    Banking Courts:
In the Banking Courts of Pakistan, proceedings start when a financial institution files a recovery suit under the Financial Institutions (Recovery of Finances) Ordinance, 2001. The court then issues summons to the defendant, which may be served through courier, registered post, or bailiff, and if these fail, substituted service through publication in newspapers may be ordered. The defendant is required to file a written statement within the prescribed period, usually 30 days, to admit or contest liability. A special feature of this system is that banking suits are summary in nature, where expedited service of notice is emphasized to prevent delay in recoveries, and in certain cases High Courts also exercise jurisdiction as Banking Courts. If the defendant appears, the matter proceeds to trial; however, if they fail to respond despite valid service, the court may proceed ex-parte and pass a decree in favor of the financial institution, which can then be swiftly executed through attachment and sale of the debtor’s property.
 
5-    Consumer Courts
In the Consumer Courts of Pakistan, proceedings begin when a consumer files a written complaint under the provincial Consumer Protection Act. Once admitted, the court issues summons to the opposite party, which are commonly served through registered post with acknowledgment due (AD) or courier service, and if these remain un-served, by affixation at the respondent’s premises. A key special feature is that consumer laws stress quick and summary disposal of cases, so service is usually affected by post or courier with less reliance on bailiffs to avoid delays. The accused party is required to appear and submit a reply within the given time; if they contest, the matter proceeds with evidence and hearings. However, if they fail to respond despite valid service, the Consumer Court may proceed ex-parte and pass an order in favor of the complainant, which may include directions for refund, replacement, compensation, or penalties.

.docx Tabular Representation.docx Size: 18.25 KB  Downloads: 0
]]> <![CDATA[Article 10-A as a Fundamental Right]]> https://board.taxportal.pk/showthread.php?tid=19 Wed, 27 Aug 2025 20:11:49 +0200 HA_Law_Graduate]]> https://board.taxportal.pk/showthread.php?tid=19 What is Article 10-A?
Article 10-A was added to the Constitution of Pakistan through the 18th Amendment in 2010. It says: “For the determination of his civil rights and obligations or in any criminal charge against him, a person shall be entitled to a fair trial and due process.” Simply, it guarantees that whenever someone’s rights or liabilities are being decided, or when someone is accused of a crime, the process must be fair, transparent, and according to law.
What was the position before Article 10-A?
Before Article 10-A, the idea of fair trial and due process existed in Pakistan’s legal system, but it was not expressly present in the Constitution. Courts relied on general principles of natural justice, such as giving a person the right to be heard ‘audi alteram partem’ and ensuring impartiality. These principles were applied by judges through interpretation, but they were not recognized as a separate, explicit constitutional right. By adding Article 10-A, Pakistan made the right to a fair trial a fundamental right.
Principles Flowing from Article 10-A
1)     Fair Trial
After its introduction in the 18th Amendment, Pakistani courts started interpreting Article 10-A to clarify what fair trial and due process means. In 2020 PLD 334 SC, the court outlined fair trial to include:
1.    Right to know the charges against you.
2.    Right to have a lawyer.
3.    Right to present evidence and cross-examine witnesses.
4.    Right to be heard before any decision affecting your rights is made.
5.    Right to have an impartial and competent tribunal.
 
2)     Due Process
In the case reported as 2011 SCMR 408, the Supreme Court of Pakistan explained due process it in a way that it includes but is not limited to:
1.   Due notice of proceedings.
2.   Reasonable opportunity to defend oneself.
3.   A tribunal or court that is impartial and honest.
4.   The tribunal must have proper jurisdiction (legal authority).
How due process affects the rights of a person
Due process protects individuals from arbitrary decisions of the government, courts, or institutions. It ensures no one can be punished, deprived of liberty, or denied their rights without a fair chance to defend themselves. For example, a person cannot be convicted in a criminal case without being given notice of the charges, a chance to hire a lawyer, and the right to present their side. Similarly, in civil or administrative matters, a person cannot be dismissed from service or deprived of property without being heard.
To summarize, due process balances the power of the State with the rights of the individual. It acts as a shield again
st unfair treatment and guarantees justice not just in outcomes, but also in the procedures leading to those outcomes.
]]> What is Article 10-A?
Article 10-A was added to the Constitution of Pakistan through the 18th Amendment in 2010. It says: “For the determination of his civil rights and obligations or in any criminal charge against him, a person shall be entitled to a fair trial and due process.” Simply, it guarantees that whenever someone’s rights or liabilities are being decided, or when someone is accused of a crime, the process must be fair, transparent, and according to law.
What was the position before Article 10-A?
Before Article 10-A, the idea of fair trial and due process existed in Pakistan’s legal system, but it was not expressly present in the Constitution. Courts relied on general principles of natural justice, such as giving a person the right to be heard ‘audi alteram partem’ and ensuring impartiality. These principles were applied by judges through interpretation, but they were not recognized as a separate, explicit constitutional right. By adding Article 10-A, Pakistan made the right to a fair trial a fundamental right.
Principles Flowing from Article 10-A
1)     Fair Trial
After its introduction in the 18th Amendment, Pakistani courts started interpreting Article 10-A to clarify what fair trial and due process means. In 2020 PLD 334 SC, the court outlined fair trial to include:
1.    Right to know the charges against you.
2.    Right to have a lawyer.
3.    Right to present evidence and cross-examine witnesses.
4.    Right to be heard before any decision affecting your rights is made.
5.    Right to have an impartial and competent tribunal.
 
2)     Due Process
In the case reported as 2011 SCMR 408, the Supreme Court of Pakistan explained due process it in a way that it includes but is not limited to:
1.   Due notice of proceedings.
2.   Reasonable opportunity to defend oneself.
3.   A tribunal or court that is impartial and honest.
4.   The tribunal must have proper jurisdiction (legal authority).
How due process affects the rights of a person
Due process protects individuals from arbitrary decisions of the government, courts, or institutions. It ensures no one can be punished, deprived of liberty, or denied their rights without a fair chance to defend themselves. For example, a person cannot be convicted in a criminal case without being given notice of the charges, a chance to hire a lawyer, and the right to present their side. Similarly, in civil or administrative matters, a person cannot be dismissed from service or deprived of property without being heard.
To summarize, due process balances the power of the State with the rights of the individual. It acts as a shield again
st unfair treatment and guarantees justice not just in outcomes, but also in the procedures leading to those outcomes.
]]> <![CDATA[Article 18: Freedom of Profession, Trade, and Business]]> https://board.taxportal.pk/showthread.php?tid=18 Tue, 26 Aug 2025 15:28:03 +0200 HA_Law_Graduate]]> https://board.taxportal.pk/showthread.php?tid=18 The Constitution of Pakistan secures a wide range of fundamental rights for its citizens in Articles 8 to 28. Article 18 protects the right of individuals to enter upon any lawful profession, trade, or business, while at the same time allowing the state to impose reasonable restrictions. The competing concepts in this article means that the right is guaranteed, but not in absolute terms. The courts of Pakistan have played a key role in explaining what exactly counts as a “reasonable restriction,”. To understand the scope of this provision, it is necessary to examine what rights Article 18 grants, how the courts have interpreted these rights, and what principles define the balance between individual liberty and state authority.
The Rights under Article 18
Article 18 outlines three closely related freedoms. First, it grants citizens the right to choose and enter any lawful profession. This covers fields such as medicine, law, teaching, or engineering, but with the understanding that certain qualifications may be prescribed by law. Second, it recognizes the right to engage in lawful trade. This means that individuals are generally free to buy, sell, or exchange goods and services, provided that the trade does not involve unlawful or prohibited items. Third, Article 18 secures the right to establish and conduct business ventures. Citizens are permitted to run businesses of their choice, subject again to compliance with the law.
Although the rights are broad, the Constitution itself acknowledges that regulation is sometimes necessary. Article 18 specifically allows the state to regulate professions through licensing, to regulate trade or industry in the interest of free competition, and to reserve certain areas of commerce or industry for exclusive control by the government. The text therefore presents freedom as the general rule but makes space for exceptions where public interest is concerned.
Judicial Interpretation of Article 18
The courts in Pakistan have long emphasized that while Article 18 guarantees important freedoms, those freedoms operate within limits. A landmark decision in PLD 2005 SC 193 brought clarity to the meaning of “reasonable restrictions.” In this case, the Supreme Court of Pakistan relied on Indian jurisprudence, particularly cases interpreting Article 19(1)(g) of the Indian Constitution, which is the counterpart of Pakistan’s Article 18. The Court affirmed that any limitation placed on the enjoyment of a right must not be arbitrary, nor should it be excessive beyond what is required in the public interest.
Further case laws elaborate that reasonable restriction may not necessarily mean prohibition or prevention completely, except in exceptional circumstances, for example the sale of alcohol (PLD 2005 SC 193). Additionally, there is nothing in this right that allows a person to carry on business wherever he pleases- for example in the street, and such regulation may be subject to regulations as per policy and overall public convenience (AIR 1967 SC 1368).
Similarly, in the regulation of professions such as medicine or law, courts have repeatedly held that licensing requirements are justified in order to ensure public safety and professional competence. By drawing such precedents, the judiciary has built a framework in which Article 18 rights are preserved but not treated as absolute. The right exists in full force so long as regulation is proportionate and tied to legitimate aims.
Balancing State Authority and Individual Freedom
Article 18 balances two competing values: the individual’s right to economic liberty and the state’s responsibility to protect the community. From the individual’s perspective, the freedom to pursue a profession or conduct trade and business is essential to dignity and independence. It allows citizens to earn their livelihoods, explore opportunities, and contribute to national development. From the perspective of the state, however, unrestricted freedom can give rise to harm, whether in the form of unsafe professional practices, monopolistic trade, or exploitative business conduct, thus the state can regulate this right for the general welfare of the people as per 2006 PLD 1523.
The courts have therefore insisted on striking a balance. Citizens retain the right to pursue their chosen economic activities, but the state is justified in stepping in where broader welfare is at stake. The key test, consistently applied by the judiciary, is whether the restriction is reasonable and proportionate.
Article 18 of the Constitution of Pakistan guarantees the freedom of profession, trade, and business, yet acknowledges that these freedoms may be subject to regulation in the public interest. By relying on precedents, the courts have provided a structured understanding of what counts as a reasonable limitation. The overall picture that emerges is one of balance. Individuals are free to pursue their economic goals, but this freedom coexists with the state’s duty to ensure fairness, safety, and justice within society.
]]> The Constitution of Pakistan secures a wide range of fundamental rights for its citizens in Articles 8 to 28. Article 18 protects the right of individuals to enter upon any lawful profession, trade, or business, while at the same time allowing the state to impose reasonable restrictions. The competing concepts in this article means that the right is guaranteed, but not in absolute terms. The courts of Pakistan have played a key role in explaining what exactly counts as a “reasonable restriction,”. To understand the scope of this provision, it is necessary to examine what rights Article 18 grants, how the courts have interpreted these rights, and what principles define the balance between individual liberty and state authority.
The Rights under Article 18
Article 18 outlines three closely related freedoms. First, it grants citizens the right to choose and enter any lawful profession. This covers fields such as medicine, law, teaching, or engineering, but with the understanding that certain qualifications may be prescribed by law. Second, it recognizes the right to engage in lawful trade. This means that individuals are generally free to buy, sell, or exchange goods and services, provided that the trade does not involve unlawful or prohibited items. Third, Article 18 secures the right to establish and conduct business ventures. Citizens are permitted to run businesses of their choice, subject again to compliance with the law.
Although the rights are broad, the Constitution itself acknowledges that regulation is sometimes necessary. Article 18 specifically allows the state to regulate professions through licensing, to regulate trade or industry in the interest of free competition, and to reserve certain areas of commerce or industry for exclusive control by the government. The text therefore presents freedom as the general rule but makes space for exceptions where public interest is concerned.
Judicial Interpretation of Article 18
The courts in Pakistan have long emphasized that while Article 18 guarantees important freedoms, those freedoms operate within limits. A landmark decision in PLD 2005 SC 193 brought clarity to the meaning of “reasonable restrictions.” In this case, the Supreme Court of Pakistan relied on Indian jurisprudence, particularly cases interpreting Article 19(1)(g) of the Indian Constitution, which is the counterpart of Pakistan’s Article 18. The Court affirmed that any limitation placed on the enjoyment of a right must not be arbitrary, nor should it be excessive beyond what is required in the public interest.
Further case laws elaborate that reasonable restriction may not necessarily mean prohibition or prevention completely, except in exceptional circumstances, for example the sale of alcohol (PLD 2005 SC 193). Additionally, there is nothing in this right that allows a person to carry on business wherever he pleases- for example in the street, and such regulation may be subject to regulations as per policy and overall public convenience (AIR 1967 SC 1368).
Similarly, in the regulation of professions such as medicine or law, courts have repeatedly held that licensing requirements are justified in order to ensure public safety and professional competence. By drawing such precedents, the judiciary has built a framework in which Article 18 rights are preserved but not treated as absolute. The right exists in full force so long as regulation is proportionate and tied to legitimate aims.
Balancing State Authority and Individual Freedom
Article 18 balances two competing values: the individual’s right to economic liberty and the state’s responsibility to protect the community. From the individual’s perspective, the freedom to pursue a profession or conduct trade and business is essential to dignity and independence. It allows citizens to earn their livelihoods, explore opportunities, and contribute to national development. From the perspective of the state, however, unrestricted freedom can give rise to harm, whether in the form of unsafe professional practices, monopolistic trade, or exploitative business conduct, thus the state can regulate this right for the general welfare of the people as per 2006 PLD 1523.
The courts have therefore insisted on striking a balance. Citizens retain the right to pursue their chosen economic activities, but the state is justified in stepping in where broader welfare is at stake. The key test, consistently applied by the judiciary, is whether the restriction is reasonable and proportionate.
Article 18 of the Constitution of Pakistan guarantees the freedom of profession, trade, and business, yet acknowledges that these freedoms may be subject to regulation in the public interest. By relying on precedents, the courts have provided a structured understanding of what counts as a reasonable limitation. The overall picture that emerges is one of balance. Individuals are free to pursue their economic goals, but this freedom coexists with the state’s duty to ensure fairness, safety, and justice within society.
]]> <![CDATA[Article 25 and Constitutional Equality]]> https://board.taxportal.pk/showthread.php?tid=17 Mon, 25 Aug 2025 09:16:38 +0200 HA_Law_Graduate]]> https://board.taxportal.pk/showthread.php?tid=17 Article 25 of the Constitution of Pakistan is the cornerstone of equality in Pakistani Law. It states simply, that all citizens are equal before the law and entitled to its equal protection; no one shall be discriminated against on the basis of sex alone; and the State may adopt special measures for the protection of women and children.
The first clause, declaring that all citizens are equal before the law, has been central to constitutional litigation. When interpreted, equality here does not mean that everyone must be treated in exactly the same way, regardless of circumstances. Rather, it requires that any difference in treatment must be based on a fair and rational principle. Additionally, In I.A. Sherwani v. Government of Pakistan (1991 SCMR 1041), the Supreme Court explained two major points on which the constitutionality of a law with respect to equality may be determined:
1)     Intelligible Differentia: a clear and reasonable distinction that separates one group of citizens from another
2)     Rational Nexus: a rational purpose that is essential to the purpose of the law
To summarize, the State must be able to explain both why it has drawn a distinction and how that distinction furthers the law’s objective. If either element is missing, the classification is arbitrary and violates Article 25.
The second clause prohibits discrimination on the basis of gender, while the third allows protective provisions for women and children. Together, these clauses reflect a move from mere formal equality to substantive justice. The Constitution recognizes that some groups, due to historical and social disadvantages, may require special treatment to achieve genuine fairness. Courts have generally upheld such affirmative measures as compatible with Article 25, so long as they are proportional and directed toward legitimate aims.
To understand this better, we look at the case of  Shirin Munir v. Government of Punjab (PLD 1990 SC 295) the Court examined whether gender-based distinctions under the Constitution could ever be justified. It explained that such distinctions are acceptable only when they are reasonable and serve a clear purpose, like maintaining single-gender schools. But in the case of medical colleges, using quotas to limit women’s access was found unconstitutional. Since most colleges were already co-educational, these restrictions were not protective but discriminatory. The Court stressed that giving preference to less qualified men over capable women violated equality, and it ruled that women must also be allowed to compete freely for open merit seats. The Supreme Court struck down arbitrary preferences in educational admissions based on gender, affirming that the State may not draw distinctions without reasonable basis.
Rights and Citizenship
A crucial feature of Article 25 is its repeated reference to “citizens.” The Constitution frequently distinguishes between rights available to every “person” and those reserved for “citizens.” Rights such as life (Article 9), dignity (Article 14), and fair trial (Article 10A) extend to all persons, which includes foreigners and even juristic entities such as corporations. By contrast, rights like freedom of movement, association, and equality under Article 25 are restricted to citizens. The Constitution itself does not define the term, but Article 260 directs us to statutory law, where the Pakistan Citizenship Act 1951 defines a citizen is one who acquires nationality by birth, descent, migration at partition, or naturalisation. Citizenship is therefore a legal status, determined by law, that decides who may invoke Article 25.
The implications of this distinction for corporations were drawn out in detail by the Islamabad High Court in PTA v. Pakistan Information Commission (2024 YLR 929). The Court noted that while corporations are legal “persons” capable of holding many rights, they are not citizens. As such, they cannot claim rights explicitly reserved for citizens, such as access to information under Article 19A. This shows that the most civil political rights remain tied to citizenship.
At the same time, PLD 2022 Lahore 756 shows the applicability of Article 25 to a non-citizen person. The Lahore High Court dealt with the arbitrary blocking of a citizen’s computerized national identity card (CNIC). This prevented the individual from functioning in society: banking, travel, and even everyday transactions become impossible. The Court held that cutting off a CNIC without lawful authority effectively strips a citizen of the equal protection guaranteed by Article 25, reducing him to a status less than that of his peers. The court held that equality before the law is meaningless if citizenship itself can be undermined by executive, and that fundamental rights in Articles 8-28 must be granted to all citizens, equally.
Read together, these cases illustrate that Article 25 functions on two levels. It affirms equality as a shield against arbitrary state action, ensuring that no citizen is deprived of rights or status without lawful justification. At the same time, it draws a boundary between citizens and non-citizens, reserving the fullest constitutional protections for those who legally belong to the State.
Essentially, Article 25 equips the courts with a test to strike down unfair distinctions. While it is still a vastly developing jurisprudence, the open-endedness of the Article makes room for an aspiration- equal opportunity  for everyone.
]]> Article 25 of the Constitution of Pakistan is the cornerstone of equality in Pakistani Law. It states simply, that all citizens are equal before the law and entitled to its equal protection; no one shall be discriminated against on the basis of sex alone; and the State may adopt special measures for the protection of women and children.
The first clause, declaring that all citizens are equal before the law, has been central to constitutional litigation. When interpreted, equality here does not mean that everyone must be treated in exactly the same way, regardless of circumstances. Rather, it requires that any difference in treatment must be based on a fair and rational principle. Additionally, In I.A. Sherwani v. Government of Pakistan (1991 SCMR 1041), the Supreme Court explained two major points on which the constitutionality of a law with respect to equality may be determined:
1)     Intelligible Differentia: a clear and reasonable distinction that separates one group of citizens from another
2)     Rational Nexus: a rational purpose that is essential to the purpose of the law
To summarize, the State must be able to explain both why it has drawn a distinction and how that distinction furthers the law’s objective. If either element is missing, the classification is arbitrary and violates Article 25.
The second clause prohibits discrimination on the basis of gender, while the third allows protective provisions for women and children. Together, these clauses reflect a move from mere formal equality to substantive justice. The Constitution recognizes that some groups, due to historical and social disadvantages, may require special treatment to achieve genuine fairness. Courts have generally upheld such affirmative measures as compatible with Article 25, so long as they are proportional and directed toward legitimate aims.
To understand this better, we look at the case of  Shirin Munir v. Government of Punjab (PLD 1990 SC 295) the Court examined whether gender-based distinctions under the Constitution could ever be justified. It explained that such distinctions are acceptable only when they are reasonable and serve a clear purpose, like maintaining single-gender schools. But in the case of medical colleges, using quotas to limit women’s access was found unconstitutional. Since most colleges were already co-educational, these restrictions were not protective but discriminatory. The Court stressed that giving preference to less qualified men over capable women violated equality, and it ruled that women must also be allowed to compete freely for open merit seats. The Supreme Court struck down arbitrary preferences in educational admissions based on gender, affirming that the State may not draw distinctions without reasonable basis.
Rights and Citizenship
A crucial feature of Article 25 is its repeated reference to “citizens.” The Constitution frequently distinguishes between rights available to every “person” and those reserved for “citizens.” Rights such as life (Article 9), dignity (Article 14), and fair trial (Article 10A) extend to all persons, which includes foreigners and even juristic entities such as corporations. By contrast, rights like freedom of movement, association, and equality under Article 25 are restricted to citizens. The Constitution itself does not define the term, but Article 260 directs us to statutory law, where the Pakistan Citizenship Act 1951 defines a citizen is one who acquires nationality by birth, descent, migration at partition, or naturalisation. Citizenship is therefore a legal status, determined by law, that decides who may invoke Article 25.
The implications of this distinction for corporations were drawn out in detail by the Islamabad High Court in PTA v. Pakistan Information Commission (2024 YLR 929). The Court noted that while corporations are legal “persons” capable of holding many rights, they are not citizens. As such, they cannot claim rights explicitly reserved for citizens, such as access to information under Article 19A. This shows that the most civil political rights remain tied to citizenship.
At the same time, PLD 2022 Lahore 756 shows the applicability of Article 25 to a non-citizen person. The Lahore High Court dealt with the arbitrary blocking of a citizen’s computerized national identity card (CNIC). This prevented the individual from functioning in society: banking, travel, and even everyday transactions become impossible. The Court held that cutting off a CNIC without lawful authority effectively strips a citizen of the equal protection guaranteed by Article 25, reducing him to a status less than that of his peers. The court held that equality before the law is meaningless if citizenship itself can be undermined by executive, and that fundamental rights in Articles 8-28 must be granted to all citizens, equally.
Read together, these cases illustrate that Article 25 functions on two levels. It affirms equality as a shield against arbitrary state action, ensuring that no citizen is deprived of rights or status without lawful justification. At the same time, it draws a boundary between citizens and non-citizens, reserving the fullest constitutional protections for those who legally belong to the State.
Essentially, Article 25 equips the courts with a test to strike down unfair distinctions. While it is still a vastly developing jurisprudence, the open-endedness of the Article makes room for an aspiration- equal opportunity  for everyone.
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