Initially, the Federal Board of Revenue (FBR) proposed tightening the additional income tax law for banks to close a loophole that banks used to avoid the tax. The additional income tax was introduced in 2022 to encourage banks to lend to the industry instead of making safe loans to the government. However, the advance income tax, the super tax and the ADR additional income tax of up to 15% are three distinct taxes and any advance or full payment cannot be an alternative to the 15% tax. In the 2023 tax year, banks made a gross profit of Rs1.6 trillion and paid Rs960 billion in income tax. Under pressure from banks, the government suspended the additional tax for 2023, but it became effective again in January 2024.

Source: The Express Tribune June 27, 2024 14:37 UTC