ISLAMABAD: The Federal Board of Revenue (FBR) has revealed that banks in Pakistan pay a heavy 53% tax on their income. FBR Chairman Rashid Langrial disclosed this during a meeting of the National Assembly’s Standing Committee on Finance on Thursday, sparking discussions on the tax structure for financial institutions.
He stated that the government wants to eliminate the Seventh Schedule, which currently provides tax exemptions and concessions to banks. Langrial emphasized the need for fair taxation, saying, “We want all sectors, including banks, to contribute equally. The goal is to remove special treatments.”
During the session, PPP leader Naveed Qamar questioned who originally introduced the Seventh Schedule. The FBR chairman replied that its origin is unclear, but noted, “It’s being rolled back under the leadership of a former banker who now serves as finance minister,” indirectly pointing to the current ministry’s shifting stance.
FBR officials added that they are working on five major policy changes. They stressed the need for banks to report their operations more transparently. The FBR wants complete and accurate details, including income statements, branch operations, and cost structures, to improve audit quality.
One key issue raised was how banks record construction costs for new branches. Officials said banks usually list all construction expenses in the first year, which inflates deductions. FBR now proposes to spread those costs over the building’s lease period, allowing for a more accurate reflection of expenses and tax liabilities.