Govt Recovers Rs. 23 Billion Windfall Tax From Commercial Banks in Just One Day

The federal government has successfully recovered Rs. 23 billion from 16 commercial banks in windfall tax following the Sindh High Court’s dismissal of financial sector petitions, according to the Ministry of Finance. The Federal Board of Revenue (FBR) secured the amount in a single day under Section 99D of the Income Tax Ordinance 2001. In a statement, the Finance Division said this recovery is a major step towards a fair tax system to ensure that elite institutions contribute their fair share. The statement credited the achievement to Prime Minister Shehbaz Sharif’s leadership, Finance Minister Muhammad Aurangzeb’s policies, and the efforts of the FBR. The Attorney General of Pakistan, the State Bank of Pakistan, and legal teams also played a key role in facilitating the process, the ministry stated. The government had urged for decades that the elite institutions have reaped extraordinary profits due to economic imbalances and inadvertently put a disproportionate tax burden on lower-income groups. To correct this, Pakistan has adopted a taxation approach in line with global practices to make sure that windfall gains from external factors are fairly taxed. The government is now moving forward with other taxation measures targeting elite earnings, including the super tax, capital value tax (CVT), tax on undistributed reserves, and tax on inter-corporate dividends. The Ministry of Finance is confident that it will broaden the tax base, reduce reliance on indirect taxation, and promote sustainable economic growth. It bears mentioning that windfall tax under Section 99D introduced via the Finance Act 2023 allows the government to tax up to 50 percent of unexpected excessive profits made by certain sectors due to economic anomalies.