Windfall tax: govt collected Rs23bn from 16 banks in a single day, says Finance Division

Pakistan government collected a total of Rs23 billion in windfall tax from 16 banks in a single day, a statement from the Finance Division said on Sunday.

The development comes after the Sindh High Court (SHC) on Thursday dismissed petitions challenging the levy of Section 99D of the Income Tax Ordinance 2001 and the SRO1588(I) of 2023 relating to the imposition of windfall tax.

“The government, while maintaining the windfall tax, has successfully collected Rs23 billion from 16 banks.

“After the SHC’s order, the Federal Board of Revenue (FBR) successfully recovered this amount in a single day under Section 99D of the Income Tax Ordinance 2001,” the statement said.

Tax on windfall income: Banking companies

The section reads: “Notwithstanding anything contained in this Ordinance or any other law for the time being in force, for any of the last three tax years preceding the tax year 2023 and onwards, in addition to any tax charged or chargeable, paid or payable under any of the provisions of this Ordinance, an additional tax shall be imposed on every person being a company who has any income, profit or gains that have arisen due to any economic factor or factors that resulted in windfall income, profits or gains”.

“The government has ensured a fair and equitable tax system without burdening the common man,” the statement from Finance Division said.

“This milestone reflects Prime Minister Shehbaz Sharif’s strong and wise leadership, the proactive policies of the finance minister, and the FBR’s efforts in ensuring a just and balanced taxation system.”

The Attorney General of Pakistan, State Bank of Pakistan, FBR chairman, and legal teams played a crucial role in achieving the success, it added.

“For decades, the elite institutions have taken advantage of economic irregularities and earned extraordinary profits, causing the tax burden to fall disproportionately on lower-income groups.”

The government is now planning to implement other pending taxes on the elite, including super tax, capital value tax (CVT), tax on undistributed reserves, and tax on inter-corporate dividends, according to the Finance Division.

“The message is clear: a fair and equitable tax system is here to stay,” the statement read.