FBR issues notification imposing 40pc add’l tax on windfall profits of banks


ISLAMABAD-The Federal Board of Revenue (FBR) has notified imposing 40 percent additional tax on windfall profits of banks arising from foreign currency deals during 2021 and 2022. The FBR’s notification has explained the mechanism of collection of tax, time period of collection, declaration and recovery from the banks. “In exercise of the powers conferred by sub-section (2) of section 99D of the Income Tax Ordinance, 2001 (XLIX of 2001), the Federal Government is pleased to specify the banking companies to be the sector for the purpose of the section 99D,” said SRO. The government would determine that the method by which the windfall income, profits and gains are required to be computed shall be in accordance with the provisions of paragraph 2 below.
It would specify that the rate of tax for the purpose of the said section 99D shall be forty percent and specify that the scope of windfall income, profits and gains shall be as computed in paragraph 2 for the calendar years 2021 and 2022 corresponding to tax years 2022 and 2023 respectively, for the purpose of the section 99D. It would appoint the 30th day of November, 2023 to be the date by which the payment of the additional tax for the purpose of the section 99D shall be made, or within such extended period not exceeding fifteen days, as the Commissioner, for reasons to be recorded in writing may allow, on an application in writing for extension of date by the taxpayer; and specify that payment of the additional tax shall be made in the federal treasury through a prescribed challan or computerized payment receipt.
Finance Act, 2023 has introduced a new Section 99D which will provide for imposition of additional tax on windfall income profits and gains of any person being a company. According to the Section 99D “Additional tax on certain income, profits and gains) of the Finance Act, 2023, notwithstanding anything contained in Income Tax Ordinance or any other law for the time being in force, for any of the last three tax years preceding the tax year 2023 and onwards, in addition to any tax charged or chargeable, paid or payable under any of the provisions of this Ordinance, an additional tax shall be imposed on every person being a company who has any income, profit or gains that have arisen due to any economic factor or factors that resulted in windfall income, profits or gains.”
The federal government may, by notification in the official gazette, – (a) specify sector or sectors, for which this section applies; (b) determine windfall income, profits or gains and economic factor or factors including but not limited to international price fluctuation having bearing on any commodity price in Pakistan or any sector of the economy or difference in income, profit or gains on account of foreign currency fluctuation; (c) provide the rate not exceeding fifty percent of such income, profits or gains; (d) provide for the scope, time and payment of tax payable under this section in such manner and with such conditions as may be specified in the notification; and (e) exempt any person or classes of persons, any income or classes of income from the application of this section, subject to any conditions as may be specified in the notification.

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