Banking Business Chapter- 27
(b) Any salary paid to an employee employed by the head office outside Pakistan;
(c) Any travelling expenditures of such employee; and
(d) Any other expenditure which may be prescribed.
Section 105(4) states that no deduction shall be allowed in computing the income of a
permanent establishment in Pakistan of a non-resident person chargeable under the head
“Income from Business” for
(a) Any profit paid or payable by the non-resident person on debt to finance the operations of
permanent establishment; and
(b) Any insurance premium paid or payable by the non-resident person in respect of such
debt.- The head office expenditure shall only be allowed if it is charged in the books of accounts of the
permanent establishment and a certificate from external auditors is provide to the effect that the
claim of such expenditure;
(i) has been made in accordance with the provision of this rule; and
(ii) is reasonable in relation to operation of the permanent establishment in Pakistan.
(5) Advance tax:
- The banking company shall be required to pay advance tax for the year in 12 installments
payable by 15th of every month. Other provisions of advance tax u/s 147 shall apply as such. - Provisions of withholding tax shall not apply.
(6) Tax on income computed
income computed shall be chargeable to tax under the head “Income from Business” at the rate
applicable in Division II of Part I of the First Schedule.(6C) Enhanced rate of tax on taxable income from Federal Government securities.—
1) The taxable income arising from additional income earned from additional investment in Federal
Government securities for the tax years 2020 and 2021 , shall be taxed at the rate of 37.5% instead
of the rate provided in Division II of Part I of the First Schedule-
2) A banking company shall furnish a certificate from external auditor along with accounts while e-filing
return of Income certifying the amount of such money invested in Federal Government securities in
preceding tax year, additional investments made for the tax year and net mark-up earned from such
additional investments for the tax year.
3) Notwithstanding anything contained in this Ordinance, the Commissioner may require the banking
company to furnish details of the investments in Federal Government securities to determine the
applicability of the enhanced rate of tax.
4) “Additional income earned” means mark-up income earned from additional investment in Federal
Government securities by the bank for the tax year
5) Additional investments" means average investment made in Federal Government securities by the
bank during the tax year, in addition to the average investments held during the tax year 2019.
6) The taxable income arising from additional investment under sub-rule (1) shall be determined
according to the following formula, namely:-
Taxable income subject to enhanced rate of tax = A x B/C Where
A. is taxable income of the banking company;
B. is mark up income earned from the additional investment for the tax year; and
C. is total of the mark-up income and non mark-up income of the banking company as per
accounts.