Super tax made permanent for banks

Super tax made permanent for banks

ISLAMABAD: The levy of super tax has been made permanent for banking companies beyond Tax Year 2021, sources in Federal Board of Revenue (FBR) said on Monday.

Tax Laws (Amendment) Ordinance, 2021 has been promulgated on February 12, 2021 after approval by the President of Pakistan.

As per the ordinance the levy of super tax on banks shall continue beyond Tax Year 2021. Through the ordinance the levy shall apply in tax year 2021 and onwards.

With this amendment the banks shall pay the super tax at four percent in subsequent tax years. For the banking companies the tax year 2022 has commenced from January 01, 2021.

The one-time super tax was imposed by inserting Section 4B of Income Tax Ordinance, 2001 through Finance Act, 2015.

The Income Tax Ordinance, 2001 explained the super tax as:

“4B. Super tax for rehabilitation of temporarily displaced persons.― (1) A super tax shall be imposed for rehabilitation of temporarily displaced persons, for tax years 2015 and onwards, at the rates specified in Division IIA of Part I of the First Schedule, on income of every person specified in the said Division.

(2) For the purposes of this section, “income” shall be the sum of the following:—

(i) profit on debt, dividend, capital gains, brokerage and commission;

(ii) taxable income (other than brought forward depreciation and brought forward business losses) under section (9) of this Ordinance, if not included in clause (i);

(iii) imputable income as defined in clause (28A) of section 2 excluding amounts specified in clause (i); and

(iv) income computed, other than brought forward depreciation, brought forward amortization and brought forward business lossess under Fourth, Fifth, Seventh and Eighth Schedules.

(3) The super tax payable under sub-section (1) shall be paid, collected and deposited on the date and in the manner as specified in sub-section (1) of section 137 and all provisions of Chapter X of the Ordinance shall apply.

(4) Where the super tax is not paid by a person liable to pay it, the Commissioner shall by an order in writing, determine the super tax payable, and shall serve upon the person, a notice of demand specifying the super tax payable and within the time specified under section 137 of the Ordinance.

(5) Where the super tax is not paid by a person liable to pay it, the Commissioner shall recover the super tax payable under subsection (1) and the provisions of Part IV,X, XI and XII of Chapter X and Part I of Chapter XI of the Ordinance shall, so far as may be, apply to the collection of super tax as these apply to the collection of tax under the Ordinance.

(6) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this section.”

In tax year 2018 the rate of super tax was four percent for banking companies on percentage of income and three percent on person other than a banking company, having income equal to or exceeding Rs500 million.

In tax year 2020 the tax rate at 4 percent was maintained for banking companies. However, in other cases it was abolished.

With the new amendment, the banking companies shall continue to pay the super tax with not time frame.