Government to Appeal IHC Decision Imposing Additional 15% Tax on Banks in Supreme Court
The Federal Board of Revenue is gearing up to move a petition in the Supreme Court, challenging the Islamabad High Court’s (IHC) judgment against a 15% supplementary duty imposed on banks. This move is crucial for fulfilling the government’s tax target for November as the tax revenue gap has reached Rs. 190 billion for the first four months of the fiscal year, the Express Tribune reported on Thursday.
The government alleges that such a disputed tax is necessary to curb the excess investment of banks in the debt of the government rather than lending to private industries. Banks are presently being levied at a regular rate of 39%. However, banks with an ADR less than 40% attract a higher tax rate of 55% against investments in the debt of the government.
In the case under consideration, banks were supposed to pay Rs. 197 billion for investing hugely in government debt. The actual amount collected may actually fall short as banks have been charging withdrawal fees on huge deposits to erase all their tax liabilities before 31 December.
The case has been put on a hearing date of December 3, and the government would present its case through legal representation for appealing to the highest court. The additional tax, which was stayed in January 2024 when it was officially repealed during 2023 under pressure from banks continues to be high on the agenda of the government as other tax cases totaling Rs. 150 billion are also waiting for judgment.
