Govt Slaps 40% Tax on Windfall Profits of Banks on Foreign Exchange Income

The federal government has slapped a 40 percent tax on windfall income of banks on the recommendation of the Federal Board of Revenue (FBR).

The decision was taken in a meeting of the federal cabinet held today with Caretaker Prime Minister Anwaar ul Haq Kakar.

The 40 percent tax would be applicable on windfall income earned from speculative rupee-dollar exchange business in 2021 and 2022.

According to an analysis by JS Global, the imposition of the 40 percent tax on the income of banks from FX dealing will have the following impact.

Courtesy: JS Global

The Finance Act, 2023 has introduced a new section 99D which will provide for the imposition of additional tax on windfall income profits and gains of any person being a company.

The Bilateral Investment Treaties with Saudi Arabia and Qatar also got cabinet’s nod. Moreover, the cabinet exempted Rule No 8, 13, 35, 38 and 40 of Public Procurement Regulatory Authority Rules 2004 for the procurement of 200,000 metric tons of urea from the international market.

The cabinet approved a budget of 267.59 million rupees for the Jammu and Kashmir State property for the current fiscal year.

The cabinet instructed preparation of draft insurance of accession with regard to ratification of Hong Kong International Convention 2009 to ensure safe and environment friendly recycling of ships.

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