Bank Alfalah Limited has disclosed ongoing legal challenges involving both federal and provincial tax authorities. The disputes were detailed in the bank’s financial report for the first half of 2025.
Federal Tax Issues Raised
The bank reported that its income tax assessments have been completed up to the 2024 tax year. However, tax authorities have raised objections for several past years, including 2008, 2014, 2017, 2019, and 2021 through 2024.
Authorities are contesting various items such as:
- Treatment of the Workers Welfare Fund (WWF)
- Allocation of certain expenses
- Taxation of dividend income from mutual funds
- Disallowance of leasehold improvement expenses
As a result, the tax department has issued demands totaling Rs1.217 billion. This figure has not changed since December 31, 2024. Bank Alfalah has appealed these assessments and is awaiting hearings at the tax tribunal level. The bank has not made any provisions for these claims, citing confidence in a favorable outcome.
Provincial Tax Claims
Separately, a provincial tax body has issued orders relating to the period from July 2011 to December 2020. The department is seeking Rs763.3 million in sales tax and penalties, alleging improper exemption claims and underpayment on certain services.
- Appeals for the 2011–2014 period are still pending with the Commissioner Appeals.
- For 2014–2020, the Appellate Tribunal ruled against the bank. Bank Alfalah has escalated the matter to the Sindh High Court.
Additional Tax Demands
The bank also faces smaller tax claims from other years. These include:
- Rs5.19 million and Rs8.60 million in sales tax demands for 2016
- Rs11.54 million in additional claims for 2017 and 2018
All these matters are currently under appeal.
Management’s Position
Despite the multiple tax challenges, Bank Alfalah has expressed confidence that the disputes will be resolved in its favor. The bank continues to pursue legal remedies and has not made financial provisions against the contested amounts.
