Additional tax on windfall income, profits, gains: Banks given Nov 30 deadline to make payment
- FBR specifies that the rate of tax for the purpose of the said section 99D shall be 40 percent
ISLAMABAD: The Federal Board of Revenue (FBR) has given deadline of November 30, 2023 to banks for payment of 40 percent additional tax on windfall income, profits and gains during calendar years 2021 and 2022.
The basis adopted for this purpose is average earning of past 6 years from foreign exchange (FE) minus the current year profit, as per accounts, to be taxed @ 40 percent, a tax expert said explaining the notification.
In this regard, the FBR has issued an S.R.O.1588 (l)/ 2023 here on Wednesday.
The FBR’s notification said that the federal government has specified the banking companies to be the sector for the purpose of the section 99D of the Income Tax Ordinance.
The FBR has determined that the method by which the windfall income, profits and gains are required to be computed shall be in accordance with the provisions of this notification. The FBR has also specified that the rate of tax for the purpose of the said section 99D shall be 40 percent.
The scope of windfall income, profits and gains shall be as computed in this SRO for the calendar years 2021 and 2022 corresponding to tax years 2022 and 2023 respectively, for the purpose of the section 99D.
The FBR has fixed November 30, 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 15 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.
The FBR has specified that payment of the additional tax shall be made in the federal treasury through a prescribed challan or computerized payment receipt.
The windfall income, profits, and gains shall be computed in accordance with the laid down formula, FBR added.
The FBR has also given Illustration- I and II (bank’s Foreign Exchange Income as declared in Financial Statements).
Copyright Business Recorder, 2023
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