ISLAMABAD: The federal cabinet has refused to grant exemption to State Bank of Pakistan (SBP) from property tax in Cantonment Boards, fearing that any such decision would set a wrong precedent.
The cabinet was informed that all Cantonment Boards had levied property tax on State Bank of Pakistan/banking Services Corporation buildings located in their respective jurisdictions, despite the fact that it was not engaged in commercial activities and was fully owned by the Government of Pakistan.
The cabinet was further informed that the properties of the SBP should, therefore, be treated as if owned by the federal government and should be exempted from the levy of property tax, in consonance with the scheme of taxation already enshrined in the SPB Act, 1956 whereby it was exempted from stamp duty, income tax in the SBP Act, 1956 and wealth tax under sections 48 and 49 of the Act.
The sources said the matter had twice been taken up with the Defence Division, which was of the view that the SBP could seek exemption from payment of tax under section 99-A of the Cantonment Act, 1924 subject to plausible justification. Accordingly, the request duly supported by Law and Justice Division, was made for grant of exemption to the SBP buildings in the light of section 99-A of the Cantonment Act 1924.
Defence Division, in its written comments made a reference to sub-section (2) of section 3 of the State Bank of Pakistan Act, 1956 (XXXIII of 1956) which reads as follows “the bank shall be a body corporate by the name of the State Bank of Pakistan or Bank-e-Daulat-e-Pakistan, having perpetual succession and a common seal, and shall by the said name sue and be used”.
