ISLAMABAD, March 21, 2025 – The Federal Board of Revenue (FBR) has successfully secured a significant Rs 11.48 billion in windfall taxes from banks operating in Punjab, following the Lahore High Court’s (LHC) decision to lift a stay order that had previously delayed tax recovery. This move marks a major milestone in the FBR’s ongoing efforts to collect taxes on extraordinary profits made by financial institutions in the country.
In a statement issued on Friday, the FBR confirmed that seven banks based in Punjab had deposited the owed windfall tax into the national treasury. MCB Bank made the largest contribution with over Rs 3.48 billion, while Allied Bank deposited more than Rs 2.95 billion. Bank AL Habib followed with a contribution exceeding Rs 2.94 billion, and Soneri Bank contributed over Rs 1.02 billion. Bank of Punjab paid Rs 870.2 million, MCB Islamic Bank Limited contributed Rs 149.4 million, and the Punjab Provincial Cooperative Bank Limited added over Rs 52.3 million.
With the collection from these Punjab-based banks, the total amount deposited into the national exchequer has now reached Rs 34.5 billion in just four weeks. This windfall tax collection comes after a similar ruling by the Sindh High Court (SHC), which lifted its stay order on banks in Sindh three weeks ago. Following that decision, banks in Sindh promptly deposited Rs 23 billion in windfall tax within just 24 hours.
The windfall tax, introduced in 2023 under Section 99D of the Income Tax Act, targets extraordinary profits generated by banks. This tax was implemented to capture the excessive earnings of banks that had benefitted from high interest rates and other favorable market conditions, ensuring that these institutions contribute fairly to the national revenue. However, the process was delayed due to prolonged legal challenges and stay orders from various courts, particularly from the Lahore and Sindh High Courts.
The decision by the LHC to lift the stay order has significantly accelerated the tax collection process, leading to substantial deposits in the national treasury. Prime Minister Shehbaz Sharif had previously issued directives to resolve these issues quickly, instructing key government officials, including Law Minister Senator Azam Nazeer Tarar, Attorney General Mansoor Awan, Finance Minister Muhammad Aurangzeb, and FBR Chairman Rashid Langrial, to take swift legal action to ensure compliance from the banks.
The FBR’s success in securing these funds is being hailed as a historic achievement. The coordinated strategy between the government, legal bodies, and the FBR has ensured the recovery of billions in windfall taxes that will now bolster the national exchequer. The funds collected will contribute to strengthening Pakistan’s revenue base, especially in a period of economic recovery and fiscal consolidation.
The government views this as an important step in building a more equitable financial system, ensuring that the profits of the banking sector are taxed appropriately and contribute to national development. With the lifting of court orders and the successful resolution of legal challenges, the FBR is expected to continue its tax recovery efforts across other sectors and regions, ensuring that the full potential of windfall tax collection is realized.
This move signals a commitment to improving the country’s financial infrastructure and increasing tax compliance, while addressing the broader issues of income inequality and economic stability in Pakistan. The FBR’s continued success in collecting windfall taxes will likely play a critical role in meeting the government’s revenue targets for the fiscal year.