November 10 news sources reported that the Lahore High Court (LHC) has granted tax exemption status to the State Bank of Pakistan (SBP) on its immovable properties and assets located in cantonment areas.
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The SBP claimed exemption from tax on its assets under Section 99(2)(f) of the Cantonments Act of 1924, according to the province supreme court’s full judgement. Hearing the SBP’s petition for the dismissal of tax notices issued by the Chaklala Cantonment Board, an SBP representative argued that the petitioner was entitled to a tax exemption because it was a corporation and not a commercial entity like the National Bank of Pakistan or any other commercial/scheduled bank or financial institution.
The SBP attorney also asserted that the central bank, by virtue of its powers and functions, was wholly owned by the federal government and performed functions on its behalf, that it was mentioned in the Fourth Schedule, Part I, Federal Legislative List at Item No. 28 of the Constitution, and that these functions were granted to the central bank via an amendment to the act and other applicable laws.
Notably, the SBP is a federal government regulatory organisation that controls commercial DFIs and banks. It possesses a variety of non-transferable assets and properties across the country that are permanent assets of the federal government. By law, the federal government’s properties are exempt from provincial and territorial taxation.