FBR sets deadline to collect 40pc tax from banks on windfall income and profits. Pakistan’s apex tax collection authority, the Federal Board of Revenue (FBR), has unveiled a new tax measure targeting the banking sector.
The initiative aims to secure a 40 percent additional tax from windfall income within the industry, as outlined in a notification shared by the FBR.
The federal government has specifically designated the banking sector under section 99D of the Income Tax Ordinance for the implementation of this novel tax strategy.
Under the provisions of this measure, a revamped method has been introduced for calculating windfall income, profits, and gains, with the tax rate fixed at 40 percent for the specified section 99D.
The FBR has set a deadline for the completion of the additional tax payment, scheduling it for November 30, 2023.
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Entities falling under the purview of this new policy are required to remit the additional tax to the federal treasury using a prescribed challan or computerized payment receipt.
To provide clarity on the implications of this tax measure, the FBR offered an illustrative example. Consider a hypothetical banking firm that garnered Rs100 million from foreign exchange dealings in 2021, with an average income of Rs50 million from such dealings over the past six years.
In this scenario, the windfall income, profits, and gains from foreign exchange dealings for 2021 would amount to Rs50 million, leading to an additional tax liability of Rs20 million.
As FBR sets deadline to collect 40pc tax from banks on windfall income and profits, this strategic tax move by the FBR underscores the government’s commitment to bolstering revenue streams.
The impact on the banking sector and the broader economic landscape will be closely observed, with stakeholders keenly assessing how entities navigate the additional tax burden imposed by this novel measure.
