Income Tax Ordinance, 2001

SEVENTH SCHEDULE

SEVENTH SCHEDULE

1[THE SEVENTH SCHEDULE(See section 100A)RULES FOR THE COMPUTATION OF THE PROFITS AND GAINS OF ABANKING COMPANY AND TAX PAYABLE THEREON1. 2[Subject to the provisions of Chapter VII and VIII, income], profits and gains of a banking company shall be taken to be the balance of the income from all sources before tax, disclosed in the annual accounts required to be furnished to the State Bank of Pakistan subject to the following provisions, namely:-(a) Deduction shall be allowed in respect of depreciation, initial allowance and amortization under sections 22, 23 and 24 provided that accounting depreciation, initial allowance or amortization deduction shall be added to the income. No allowance or deduction under this rule shall be admissible on assets given on finance lease.(b) Section 21, sub-section (8) of section 22 and Part III of Chapter IV shall, mutatis mutandis, for computation of a banking company apply.3[(c) Provisions for advances and off balance sheet items shall be allowed upto a maximum of 1% of total advances; 4[and provisions for advances and off-balance sheet items shall be allowed at 5% of total advances for consumers and small and medium enterprises (SMEs) (as defined under the State Bank Prudential Regulations)] provided a certificate from the external auditor is furnished by the banking company to the effect that such provisions are based upon and are in line with the Prudential Regulations. Provisioning in excess of 1% 5[of total advances for a banking company and 5% of total advances for consumers and small and medium enterprises (SMEs)] would be allowed to be carried over to succeeding years:6[Provided that if provisioning is less than 1% of advances, for a banking company then actual provisioning for the year shall be allowed:]7[Provided further that if provisioning is less than 5% of advances for consumers and small and medium enterprises (SMEs) then actual provisioning for the year shall be allowed and this provisioning shall be allowable from the first day of July, 2010.]8[Explanation.- For removal of doubt, it is clarified that-(i) provision for advance and off balance sheet items allowed under this clause, at the rate of 1 percent or 5…