ISLAMABAD: President Asif Ali Zardari on Monday night promulgated the Income Tax (Amendment) Ordinance, 2024, introducing significant changes to the taxation framework for the banking sector. The move is expected to generate an estimated Rs70 billion in revenue by December 31, 2024, aiding the Federal Board of Revenue (FBR) in narrowing its tax collection shortfall.
Under the ordinance, the tax rate for banking companies has been revised to 44% for the tax year 2025. The rate will gradually decrease to 43% in 2026 and 42% from 2027 onwards. In contrast, the tax rates for small companies and other companies remain at 20% and 29%, respectively.
The ordinance also amends the First and Seventh Schedules of the Income Tax Ordinance, 2001, specifying that profits and gains of banking companies will be subject to these revised tax rates from the tax year 2025 onward. The “gross advances and deposits” for calculating the Advance Deposit Ratio (ADR) will now be determined based on the amounts disclosed in annual audited accounts.
The FBR anticipates that the additional revenue from the banking sector will help mitigate its fiscal challenges. This amendment reflects the government’s broader efforts to enhance revenue collection while balancing the tax burden across sectors.
This policy adjustment comes as part of a series of fiscal reforms aimed at addressing the country’s economic challenges, with the banking sector positioned as a key contributor to the national exchequer.
Samra Zulfiqar, a real estate analyst at Zameen.com, is passionate about finding projects that offer buyers the best returns. Her keen insights spotlight the market’s most promising opportunities.
