Karachi, March 6, 2025 – BankIslami Pakistan Limited has decided to challenge the imposition of windfall tax in the Supreme Court of Pakistan after its petition was dismissed by the Sindh High Court.
This move comes as part of the bank’s ongoing legal battle against the tax authorities regarding the levy.
The Sindh High Court recently rejected a petition filed by multiple banks, including BankIslami, that sought suspension of the windfall tax. According to the bank’s Annual Report 2024, the tax was levied under SRO 1588(I)/2023, issued on November 21, 2023, which designated banking companies as a ‘sector’ for taxation under Section 99D of the Income Tax Ordinance, 2001, applicable to tax years 2022 and 2023.
READ MORE: SHC Upholds Windfall Tax, Denies Suspension Request
Following this decision, the tax authorities issued a recovery notice to BankIslami, creating a demand of Rs 594 million. In response, the bank’s legal counsel challenged the levy in court. However, while the Sindh High Court ruled against BankIslami, similar petitions in the Islamabad High Court and Lahore High Court have resulted in a suspension of Section 99D’s operation. As a result, BankIslami has now decided to escalate the matter to the Supreme Court, along with a stay application against the levy.
The bank’s management, based on legal advice, remains confident that their appeal will succeed, and therefore, no provision for the tax liability has been made in the financial statements.
Beyond the windfall tax issue, BankIslami is engaged in several tax-related disputes. The bank’s income tax returns for the years 2023 and 2024 have been filed, while tax assessments have been conducted by the authorities. BankIslami has paid the demanded amounts under protest and has lodged appeals with the Appellate Tribunal Inland Revenue (ATIR), which are still pending.
Additionally, BankIslami is dealing with unresolved tax matters related to the defunct KASB Bank Limited. Several appeals regarding tax assessments dating back to 2003, 2005, and 2010 are currently under review. While the ATIR has ruled in the bank’s favor in some cases, others remain pending.
READ MORE: Banks Pay Rs 25 Billion Windfall Tax After Petition Dismissal
BankIslami is also contesting a total demand of Rs 102.199 million from the Sindh Revenue Board (SRB) regarding the imposition of sales tax on services. Appeals are ongoing before the Commissioner Appeal, SRB, and the Supreme Court.
Furthermore, the bank has received multiple tax monitoring notices for tax years 2017 to 2023, prompting further appeals and legal proceedings. Despite these ongoing matters, BankIslami’s management remains optimistic about a favorable resolution.