The federal government will likely abolish up to 15 percent additional income tax on the banks’ profits made by extending loans to the Finance Division.
This decision follows an understanding between commercial banks and the federal government to abolish the Advances-to-Deposit rate-based income tax through the Finance Act 2024, reported Express Tribune.
While the government plans to abolish the tax on banks, it is not reversing the significant tax increase for the salaried class, which is now expected to contribute about Rs. 435 billion in income tax next year due to higher rates. Military authorities have requested the finance minister to review the proposed tax increase for the salaried class and reconsider the flat 15 percent capital gains tax on property sales.
Under pressure from banks, the government suspended the additional tax for 2023, but it became effective again in January 2024. The normal income tax rate for banks is 39 percent, but depending on their ADR, the rate can go up to 55 percent. Banks have criticized the ADR tax as unjust, arguing that it does not force the government to borrow.
For the next fiscal year, the government plans to borrow Rs. 24 trillion from banks to service existing debt. Following the International Monetary Fund’s ban on direct borrowing from the State Bank of Pakistan, the Ministry of Finance now borrows through the banking sector at a higher interest rate than it would have paid to the central bank.
Govt has borrowed money from banks and raising tax will force people withsraw money which bank do not have may be
Plz note that govt would withdraw all the taxes except income tax on salaries – because from everywhere they get kickbacks but cannot get anything from salaried class. Allah will take revenge from those who are involved in these illegal and unlawful and criminal activities.
Government is charging 18 percent on Milk but is not able to get 15 percent tax from commercial banks? This is the daylight robbery going on in front of our eyes. Where is government actually?. This finance minister is squeezing the salaried class and strengthening the elite class and elite business groups.
Sensodyne
the best solution to this economic mess is introducing sharia system removing interest based banking and bringing in sharia laws.executing the corrupt.
Which country has Sharia based banking?we are incapable nincompoop underdogs in all respects. First become something then dictate your ideology.
Easier said than done!
What magic will sharia system bring to public borrowing? Is borrowing money, free in sharia system?
Best solution to economic mess, for government is to reduce their expenditure, so they have to borough less and pay existing debt as quickly as possible. Reducing corruption is another achievement which no one is willing to control.
As for sharia system many will get their hands chopped off not because of their fault. Countries that already have sharia system (or some form), still have mess in them, be it economic or political.
Haramiu.. awam sy roti ka nawala tk cheen lea amm banday k toray sy zaray saving k wo cheen rhy ho. Allah ki lanat ho tum per
آج یزید بھی اپنے اِن پیروکار پر فخر کر رہا ہوگا
کسٹمر کو کیا فائدہ ہو گا