The federal government will like abolish Up to a fifteen percent additional income tax on the profits earned by the banks from lending money to the Finance Division will probably be eliminated.This move comes from an agreement reached by commercial banks and the federal government to use the Finance Act 2024 to do away with the Advances-to-Deposit rate-based income tax.
Although the government intends to remove the bank tax, it is not undoing the substantial tax hike for the salaried class, which is now projected to pay over Rs. 435 billion in income tax in 2019 as a result of higher rates. The finance minister has been asked by military authorities to reevaluate the flat 15 percent capital gains tax on property sales and to examine the anticipated tax rise for the salaried class.
Bank pressure forced the government to halt the additional tax for 2023, but in January 2024 it resumed. Bank income tax rates typically range from 39 percent to 55 percent, depending on their ADR. Banks contend that the ADR tax is unfair because it does not compel the government to borrow money.
To pay off its current debt, the government intends to borrow Rs. 24 trillion from banks during the upcoming fiscal year. The Ministry of Finance currently borrows money through the banking industry at a higher interest rate than it would have paid to the central bank as a result of the International Monetary Fund’s ban on direct borrowing from the State Bank of Pakistan
