ISLAMABAD – FBR strongly rejects the Rs 1.3 billion worth of penaltiesimposed upon banks by SBP.
The Federal Board of Revenue (FBR) has refused to treat Rs. 1.3 billionworth of penalties imposed on banks by the State Bank as expenses.
According to the report by a local media house, the FBR is asking them toinclude the amount under pre-tax head in their books.
The report stated that the FBR has disallowed the monetary penalties to bementioned as expenses by banks to reduce tax liability. The banks that werepenalized are treating the monetary penalties imposed by the State Bank ofPakistan (SBP) as expenses.
An official at Large Taxpayers Unit (LTU) confirmed that no deduction toreduce tax liability is allowed in case of any fine or penalty paid orpayable by taxpayers for the violation of any law, rule or regulation,under section (21(g)) of Income Tax Ordinance 2001.
Read Top Stories
The official said that the law is applicable to a domestic bank with aforeign branch and the penalty is imposed by authorities of the countrywhere the branch is located.
Overall, the central bank has imposed penalties of Rs. 1.34 billion sinceJuly 2019. Several banks were penalized multiple times. SBP has publiclyenforced the monetary penalties on banks for violating rules andregulations since July 2019.
The central bank has enforced stringent rules and regulations regardingCustomer Due Diligence/Know Your Customer as this ultimately caused thenotorious Benami accounts in the banking system.
