FBR amends tax provisions for banks to align income with taxable earnings

The Federal Board of Revenue (FBR) has revised the banking schedule under the Income Tax Ordinance 2001 to bring banking income closer to taxable income, starting July 1, 2025. 

According to the FBR’s budget explanatory circular on the Finance Act 2025, amendments have been made to the provisions outlined in the seventh schedule for banking companies.

These revisions align banking income more accurately with taxable income, allowing rental and office refurbishment expenses in a specified manner, as outlined in the new provisions. The expense deductions for bad debts have also been reinforced according to established guidelines. 

Additionally, new filing requirements for external auditors have been introduced to ensure authenticity in bad debt claims.

The FBR has committed to supporting compliance with these new provisions and ensuring their judicious enforcement. A redressal committee, involving representatives from both the business community and the Board, will oversee the implementation.