IHC stays windfall tax collection  

The Islamabad High Court (IHC) refrained the government from collecting windfall tax from banks till the next hearing, the 24NewsHD TV  channel reported on Wednesday.

Justice Sardar Ejaz Ishaq Khan issued the written order on a petition filed by a private bank against the caretaker government’s move. The court noted that taxation matters may not fall under the jurisdiction of the caretaker government.

According to the petitioner's counsel, the notification for the additional tax should have been presented to the National Assembly. Consequently, the implementation of the 40% additional tax on windfall income is suspended until the next hearing, scheduled for December 8.

The IHC issued notices to the FBR and the Attorney General of Pakistan seeking their comments. The federal cabinet previously approved the imposition of a 40% tax on extraordinary profits earned by banks, particularly from foreign exchange transactions in 2021 and 2022.

The IHC noted that Section 99D appears inchoate in that it does not spell out the consequences of the National Assembly disagreeing with the “federal government’s computation of the windfall income or its chosen rate of additional tax, and the benefit of the ambiguity over the precarious existence of the progeny of a charging section can only extend to the taxpayer.

Therefore, it ruled that the SRO cannot but be taken to remain in abeyance until it is blessed by the National Assembly (assuming all other legal grounds operating in the department’s favour thereafter).