ISLAMABAD: The Federal Board of Revenue (FBR) has directed banks to pay a 40% additional tax on windfall income, profits, and gains earned during the calendar years 2021 and 2022, setting a deadline of November 30, 2023, for compliance.
According to tax experts, the taxation basis involves averaging the earnings from foreign exchange (FE) over the past six years and deducting the current year's profit, subject to a 40% tax rate, as detailed in the issued notification, S.R.O.1588 (l)/ 2023.
The FBR, through this notification, designates banking companies under section 99D of the Income Tax Ordinance and specifies the method of computation for windfall income, profits, and gains, all subjected to a 40% tax rate.
The specified scope for these windfall earnings aligns with the calendar years 2021 and 2022, corresponding to tax years 2022 and 2023. The deadline for the additional tax payment is November 30, 2023, with a provision for a 15-day extension upon application and valid reasons.
Payment procedures require the additional tax to be deposited in the federal treasury through a designated challan or computerized payment receipt. The computation of windfall income, profits, and gains is to follow a prescribed formula provided by the FBR, detailed in Illustration- I and II pertaining to a bank’s Foreign Exchange Income as declared in Financial Statements.
