Customize Consent Preferences

We use cookies to help you navigate efficiently and perform certain functions. You will find detailed information about all cookies under each consent category below.

The cookies that are categorized as "Necessary" are stored on your browser as they are essential for enabling the basic functionalities of the site. ... 

Always Active

Necessary cookies are required to enable the basic features of this site, such as providing secure log-in or adjusting your consent preferences. These cookies do not store any personally identifiable data.

No cookies to display.

Functional cookies help perform certain functionalities like sharing the content of the website on social media platforms, collecting feedback, and other third-party features.

No cookies to display.

Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics such as the number of visitors, bounce rate, traffic source, etc.

No cookies to display.

Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.

No cookies to display.

Advertisement cookies are used to provide visitors with customized advertisements based on the pages you visited previously and to analyze the effectiveness of the ad campaigns.

No cookies to display.

HomeBusinessTax on bank deposit...

Tax on bank deposit earnings likely to go up by 2%

To offset potential revenue losses from proposed tax relief for the salaried class and other sectors, the Federal Board of Revenue (FBR) is considering a 2% increase in the tax rate on interest income from commercial bank deposits and savings schemes in the upcoming 2025–26 budget.

The proposed hike would apply to both filers and non-filers.

The International Monetary Fund (IMF) has asked the government to present detailed tax proposals to bridge the anticipated revenue shortfall.

This gap has emerged as formal sector volumes have declined following the steep tax increases introduced in the 2024–25 budget under the IMF programme.

“It is one of the options to increase tax rates on passive income, as individuals as well as companies place money in commercial banks and saving schemes,” one top official said while talking.

“The current tax rate on interest income for filers was 15%, while for non-filers, it was increased to 35%. It is under consideration to jack up tax rates for both filers and non-filers by 2% on their passive incomes in the next budget,” they added.

The official said that the IMF had not yet granted its final nod on this tax proposal.

Dr Muhammad Iqbal, former FBR Member Tax Policy, when contacted, said that the rate at 15% on interest income was already quite high because the bank deposits on which income was received from banks also arose from income which was already subjected to tax at the time of its earning.

Moreover, he argues that this rate of 15% is only applicable to interest income up to Rs5 million per annum.

For income exceeding Rs5 million, the normal applicable rate on the total income (including interest income) is payable. Interest income earned by companies is also taxable at the normal tax rate for companies (29% + surcharge + super tax).

“If this tax rate is hiked, it will make life difficult for those who depend on the interest income from their savings invested in banks and saving schemes. They are already suffering due to falling returns from banks owing to a reduction in policy rates.

The commercial banks will also suffer as their deposits may decline,” he added.

He was of the view that the tax rate on dividends was 15%, so why was the government considering creating another distortion?

On the other hand, the tobacco and beverages sectors took the stance that their volumes shrank and shifted towards untaxed products. The FBR high-ups sought assurances on increased tax collection if the rates were reduced. The beverage industry proposed to reduce the FED from 20% to 15%.

The tobacco sector’s contribution is going to reduce from Rs292 billion in fiscal year 2023-24 to Rs247 billion in the ongoing fiscal year ending on June 30, 2025, indicating a reduction of Rs45 billion in the outgoing fiscal year.

Source link

- A word from our sponsors -

spot_img

Most Popular

More from Author

- A word from our sponsors -

spot_img

Read Now

Let human rights be

Civil society organisations (CSOs) in Pakistan are currently enduring one of the most challenging periods in the country’s history....

X CEO Linda Yaccarino Steps Down After Two-Year Tenure | Economy News

New Delhi: Linda Yaccarino has announced her resignation as CEO of X (formerly Twitter). This brings her two-year stint at the Elon Musk-owned platform to an end. In a heartfelt post, she called the role “the opportunity of a lifetime” and thanked Musk for trusting her to...

Top tech companies partner with nuclear plants as AI energy needs surge

NEWYou can now listen to Fox News articles! There has been little change in U.S. energy consumption over the past decade. Increased efforts to make energy use more efficient have kept levels low. But over the next five years, demand for electricity to power data...

Watchdog bans host of ads for prescription-only weight-loss medications

Your support helps us to tell the storyFrom reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines...

‘Jurassic World Rebirth’ | Anatomy of a Scene

“Hi, My name is Gareth Edwards and I am the director of “Jurassic World Rebirth.” So right now we’re with a family who have kind of been shipwrecked on this island with our team of experts. and essentially trying to get across the island to get rescued,...

North America’s oldest known pterosaur, a flying reptile the size of a “small seagull,” discovered in Arizona, researchers say

For paleontologist Ben Kligman, the question was: Is this fragile jawbone a pterosaur or not? Other researchers also had questions about the fossil, unearthed along with thousands of others during a decades-long archaeological dig at a remote bone bed in the Petrified Forest National...

Parvati Shallow reclaims her story in memoir, “Nice Girls Don’t Win”

Parvati Shallow reclaims her story in memoir, "Nice Girls Don't Win" - CBS News ...

Capgemini buys outsourcing company WNS for $3.3billion in AI push

BENGALURU: India's French connection is growing stronger. French IT services firm Capgemini, which has more than half of its 3.4 lakh employees in India, is acquiring one of the country's business process management (BPM) pioneers, WNS, for $3.3 billion. The move is seen as an...

Should you use hydration multipliers — includes Liquid I.V. — in extreme heat?

Your support helps us to tell the storyFrom reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines...