The government is grappling with whether to abolish up to 15% additional tax on bank profits from loans to the finance ministry or tighten laws to recover an extra Rs60 billion from financial institutions next year. The Federal Board of Revenue (FBR) has proposed a shift to average annual lending calculations to close loopholes exploited by banks. However, the central bank and certain government factions favor maintaining or reducing the tax. With the budget announcement imminent, any relief to banks could face scrutiny amid plans to hike sales tax and meet an ambitious Rs12.9 trillion tax collection target.
