Banks contribute Rs72 billion to FBR under new income tax ordinance

ISLAMABAD: Rashid Mahmood Langrial, the Chairman of the Federal Board of Revenue (FBR), during a session of the Senate Standing Committee on Finance on Wednesday, announced that the banks had deposited Rs72 billion to the FBR by December 31, 2024, following the implementation of the Income Tax (Amendment) Ordinance, 2024.

This ordinance introduced modifications to the Advance Deposit Ratio (ADR) applicable to banks, and previously, the banks had engaged in legal disputes over this issue with the FBR.

During the session, Finance Minister Muhammad Aurangzeb underscored the government’s commitment to increasing the taxation on bank profits to meet its financial requirements, stating, “Banks must contribute to supporting the government.”

The Senate Standing Committee on Finance and Revenue session convened under the leadership of Senator Saleem Mandviwalla to discuss essential financial and trade matters, focusing on tax reforms, money bills, and the challenges faced by the customs department in managing international trade.

FBR aims to meet tax-to-GDP target despite collection shortfall

Mandviwalla addressed the ongoing controversy regarding the classification of certain legislative proposals as “money bills.” and said that the current laws that have been labelled as money bills should be amended to impose measures against non-filers. “The government has communicated to us that the Speaker has characterized it as a money bill, but when I inquired with the Speaker of the National Assembly, he refuted that characterisation,” he said.

The committee also reviewed the Senate’s role in managing money bills, with Mandviwalla asserting that although the Senate could deliberate on such bills, it lacked the authority to vote on them.

“According to the law, if there is a disagreement in the Senate regarding a bill’s classification as a money bill, the Speaker of the National Assembly will hold the final authority,” Mandviwalla explained.

Senator Shibli Faraz echoed this sentiment, suggesting that the Law Ministry’s input would be valuable in clarifying the issue and also noted that Rs440 billion had been returned to banks in January 2025.