ISLAMABAD: The higher rate of tax for “Advance to Deposit Ratio” will not apply on banks for tax year 2024, i.e., calendar year 2023. The Federal Board of Revenue (FBR) issued SRO 226 (I)/ 2023 to amend the Seventh Schedule of the Income Tax Ordinance, 2001, on Tuesday.

Under the said notification, the FBR will not collect additional tax from the banks on “Advances to Deposit Ratio” for the tax year 2024.

Through another notification, the amendment has been made in the Seventh Schedule of the Income Tax Ordinance 2001 exempting profit on debt and capital gains on government-approved debt and debt instruments in the hands of a non-resident company approved for this specific clause by the federal government. This is to incentivise foreign banks to sell bonds in foreign markets, a tax expert explained.

FBR drafted no proposal to tax bank deposits

The notification SRO 226 (I)/ 2023 said, “in exercise of the powers conferred by rule 10 of the Seventh Schedule to the Income Tax Ordinance, 2001 (XLIX of 2001), the Federal Government is pleased to direct that the following further amendments shall be made in the Seventh Schedule, namely: — In the aforesaid Schedule, in rule 8, after sub-rule (4), the following new sub1rule shall be added, namely: - “(5) The provisions of sub-rule (6A) of rule 6C shall not apply to a banking company for tax year, 2024.”

Copyright Business Recorder, 2023