Karachi, March 2, 2025 – The Federal Board of Revenue (FBR) has issued a tax demand of Rs 1.22 billion against Bank Alfalah for multiple tax years, citing various discrepancies in tax payments.
According to the 2024 annual report, Bank Alfalah confirmed that its income tax assessments have been finalized up to and including the tax year 2024. However, for tax years 2008, 2014, 2017, 2019, and 2021 to 2024, the FBR raised concerns over issues such as the default in payment of Workers Welfare Fund (WWF), allocation of expenses to dividend and capital gains, and the classification of dividend income from mutual funds. Additionally, the disallowance of leasehold improvements contributed to the total tax demand of Rs 1,217.274 million.
Bank Alfalah has filed an appeal, which is currently pending before the Tribunal. The bank’s management remains confident that the ruling will be in its favor, and thus, no provision has been made for this tax liability in its financial statements.
In another case, Bank Alfalah received tax orders from a provincial tax authority for the period between July 2011 and December 2020. The tax authority demanded sales tax on banking services and a penalty amounting to Rs 763.312 million (excluding default surcharge), citing disallowed exemptions and alleged short payments. Appeals against these orders are pending before the Commissioner Appeals and the Appellate Tribunal. The bank has not made any provisions against these claims, believing the appellate process will resolve the matter in its favor.
Furthermore, Bank Alfalah received an order from a tax authority demanding Rs 5.191 million (excluding default surcharge) for the alleged non-payment of sales tax on specific transactions in the accounting year 2016. A similar demand for Rs 8.601 million was issued for the same year. These cases are currently under appeal with the Commissioner Appeals.
Additionally, a new order for accounting years 2017 and 2018 raised a tax demand of Rs 11.536 million (excluding default surcharge), which is also under appeal. The bank maintains that these issues will be settled favorably through the appellate process.
Several other addbacks by tax authorities for different assessment years are still under appeal before the Commissioner of Inland Revenue (Appeals), the Appellate Tribunal Inland Revenue (ATIR), the High Court of Sindh, and the Supreme Court of Pakistan. Bank Alfalah remains engaged in legal proceedings, confident that the outstanding tax matters will be resolved in its favor.