Written by Hamza Shahnawaz in Taxation Supreme Court rules that pension fund surpluses are not taxable bank income unless actually refunded to the employer. Islamabad, October 30, 2026: The Supreme Court has dismissed an appeal filed by the Federal Board of Revenue (FBR) against MCB Bank, ruling that surplus generated in a pension fund cannot be treated as a bank’s taxable income unless the amount is actually refunded to the employer. In its judgment authored by Justice Aqeel Ahmed Abbasi, the apex court held that under Rule 4 of Part II of the Sixth Schedule to the Income Tax Ordinance, 2001, employer contributions to a pension fund and income earned on those contributions become taxable in the year in which the amount is actually received back by the employer. The court observed that although banks operate under a special tax regime prescribed in the Seventh Schedule, it contains no specific provision dealing with pension fund surpluses. Consequently, the relevant provisions of the Sixth Schedule apply…