SHC Upholds Windfall Tax on Banks, FBR Collects Rs72 Billion

The Sindh High Court (SHC) has rejected the petitions challenging the application of Section 99D of the Income Tax Ordinance 2001 and the SRO 1588 (I) of 2023, which pertain to the imposition of a windfall tax. Following the court's ruling, the government has upheld its decision to collect the windfall tax from banks.

The Federal Board of Revenue (FBR) successfully recovered the tax from banks in a single day under Section 99D of the Income Tax Ordinance 2001.

The SHC's ruling addressed petitions that contested the validity of Section 99D of the Income Tax Ordinance 2001 and the related SRO 1588(I) of 2023, dated November 21, 2023, concerning the windfall tax. The court dismissed these petitions and all associated pending applications, citing reasons to be documented in the future.

In a related development, FBR Chairman Rashid Mahmood Langrial recently announced that by December 31, 2024, banks had deposited Rs72 billion with the FBR following the introduction of the Income Tax (Amendment) Ordinance, 2024, which altered the Advance Deposit Ratio (ADR) for banks.

Langrial also informed the Senate Standing Committee on Finance that all disputes between banks and the tax authorities had been resolved through the new Ordinance. Previously, banks had engaged in legal battles with the FBR over the ADR issue.