Federal Board of Revenue (FBR) has mandated a deadline of November 30 for banks to fulfill their obligation of paying a substantial 40 percent additional tax on windfall income, profits, and gains accrued during the calendar years 2021 and 2022.
Meanwhile, the federal government, through S.R.O.1588 (l)/2023 issued on Wednesday, has singled out banking companies as the focal sector for the purpose of section 99D of the Income Tax Ordinance.
FBR specifies computation method
According to the issued notification, the FBR has meticulously detailed the methodology for computing windfall income, profits, and gains, ensuring adherence to specified provisions.
Moreover, a fixed tax rate of 40 percent has been established for the purpose of section 99D, providing clarity on the financial obligations banks must meet.
Deadline Extension Possible
Recognizing the dynamic nature of financial operations, the FBR has allowed for the possibility of an extended deadline, not exceeding fifteen days beyond November 30, 2023.
This extension, however, is subject to approval by the Commissioner, contingent upon a written application by the taxpayer, accompanied by reasons justifying the need for an extension.
The FBR has specified that the payment of the additional tax must be processed through the federal treasury using a prescribed challan or computerized payment receipt. This meticulous requirement aims to ensure a transparent and traceable process in line with regulatory standards.
Formulaic approach
In a bid to maintain consistency and fairness, the FBR has outlined a formulaic approach for the computation of windfall income, profits, and gains.
This method, as prescribed by the tax authorities, aims to create a standardized framework for evaluating financial windfalls in the banking sector.
