FBR Eyes Increasing Tax on Bank Profits to Avoid Rs. 550 Billion Shortfall

The Federal Board of Revenue (FBR) is considering a proposal to increase taxes on bank profits to avoid a Rs. 550 billion shortfall for the month of December, sources informed ProPakistani. The move is expected to generate up to Rs. 100 billion in additional revenue. Officials said that banks might receive concessions on their advance deposit ratios, either to the treasury or the private sector, as an incentive to accept the higher tax burden. However, without this tax hike, meeting the revenue shortfall may be unachievable. The proposal, if approved, could be implemented within days, sources added. FBR’s projected tax shortfall for December is set to reach Rs. 550 billion, adding to the Rs. 356 billion revenue deficit recorded during July-November. FBR has set an ambitious target to collect Rs. 1.4 trillion in December alone but it doesn’t look achievable this time, sources added. It bears mentioning that earlier this month, the government decided to implement alternate fiscal schemes to tax bank profits accrued from investment in government securities. It even constituted a high-level committee to review the existing legal framework of fiscal measures related to Advance to Deposit Ratio of the banking sector.