Karachi, September 5, 2024 – The Federal Board of Revenue (FBR) has officially notified a significant tax increase for individuals earning profit from bank deposits but who are not listed on the Active Taxpayers List (ATL). The tax rate for these non-ATL individuals has been set at 35%, a substantial hike from the rate applied to ATL members.
The FBR has updated its withholding tax card for the tax year 2024-25, outlining the new rates for various forms of profit on debt under Section 151 of the Income Tax Ordinance, 2001. According to the notification, profits from bank deposits will be subject to different tax rates depending on whether the taxpayer is included in the ATL or not.
For individuals and entities listed on the ATL, the tax rate remains at 15%. However, non-ATL individuals will be subject to a much higher rate of 35%, more than double the standard rate. This significant discrepancy is part of the FBR’s efforts to encourage taxpayers to ensure their inclusion on the ATL by filing their tax returns on time and regularly.
The FBR also elaborated on the tax treatment of profit on debt generated through Sukuk investments by Special Vehicle Purpose (SPV) entities or companies. The tax rate structure varies across different types of taxpayers:
• Companies: 25% for ATL members, but 35% for non-ATL members.
• Individuals or Associations of Persons (AOPs) earning more than Rs. 1 million: 12.5% for ATL members, 35% for non-ATL.
• Individuals or AOPs earning less than Rs. 1 million: 10% for ATL members, 35% for non-ATL.
These measures are in line with the FBR’s strategy to increase tax compliance and broaden the tax net. By setting higher tax rates for those outside the ATL, the government aims to incentivize individuals and companies to submit their tax returns on time, thus contributing to national revenue growth.
This notification comes as part of broader reforms under the Income Tax Ordinance, 2001, which seeks to streamline tax procedures and ensure that non-compliant taxpayers face higher liabilities. The FBR’s withholding tax regime plays a critical role in ensuring the collection of revenue at the source, especially from non-ATL individuals who may otherwise evade formal taxation.
Taxpayers are encouraged to verify their status on the ATL and ensure timely filing of their returns to avoid the significantly higher tax rate.
