Karachi, June 11, 2025 – The Finance Bill 2025 has introduced a major increase in income tax for individuals who are not on the Active Taxpayers List (ATL), targeting the profit they earn from bank deposits.
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Finance Bill 2025 imposes 20% tax rate on bank profit
Karachi, June 11, 2025 – In a move set to impact millions of savers and investors across the country, the government has proposed a notable increase in the tax rate on profit earned from bank deposits under the Finance Bill 2025.
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Tax Collection from Profit on Debt Surges by 103% Amid Soaring Interest Rates
Karachi, November 11, 2023 – The fiscal landscape of Pakistan has witnessed a remarkable surge, with tax collection from profit on debt skyrocketing by an impressive 103 percent, propelled by the prevailing high-interest rates, according to an official report.
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Tax Rates on Bank Deposits and Saving Schemes in Pakistan Revealed
Karachi, August 3, 2023 – The Federal Board of Revenue (FBR) in Pakistan has issued an official notification revealing the tax rates on bank deposits and national savings schemes under Section 151 of the Income Tax Ordinance, 2001.
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Expenditure against profit on debt allowed
Section 28 of Income Tax Ordinance, 2001 has allowed expenses to taxpayers against profit on debt to the extent used in business purpose.
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Tax on profit on debt under Section 7B
The Federal Board of Revenue (FBR) has introduced a pivotal addition to the Income Tax Ordinance, 2001, with the incorporation of Section 7B. This section specifically addresses the taxation of profit on debt derived by individuals or non-corporate entities.
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Profit from government securities to be taxed at 15%
ISLAMABAD: The Federal Board of Revenue (FBR) has said that interest income earned from investment in federal government securities will be taxed at the rate of 15 per cent under Final Tax Regime (FTR) with effect from July 01, 2021.
In an explanation to Finance Act, 2021, the FBR said that interest income earned by all taxpayers except banking and insurance companies from investment in federal government securities shall be taxed at the rate of 15 per cent under final tax regime. This has been provided in clause (20) of Part III of the second schedule on the Income Tax Ordinance, 2001.
The FBR said that the scope of separate block taxation on interest income has been reduced. Previously, interest income up to Rs 36 million in case of individuals and Association of Persons (AOPs) was chargeable to tax at the rates ranging from 15 per cent to 20 per cent under final tax regime.
By virtue of new amendments; the interest income up to Rs5 million shall be taxed at the rate of 15 per cent under final tax regime. If the interest income is more than Rs5 million, it shall be taxed under normal tax regime.
Uniform rate of withholding tax under section 151 of the Ordinance on interest income has been introduced at 15 per cent.
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Tax collection on profit from bank deposits increase to Rs54.55bn in July – March
KARACHI: Withholding income tax collection from profit on bank deposits registered 11 percent growth to Rs54.55 billion during first nine months (July – March) 2020/2021, sources said on Monday.
The collection of withholding tax from profit on bank deposits was Rs49 billion in the nine months of the last fiscal year, officials at Regional Tax Office (RTO) –I Karachi said.
The RTO-I Karachi, is a revenue collection arm of the Federal Board of Revenue (FBR), has mandate to collect the withholding tax on profit from debt on bank deposits under Section 151 of the Income Tax Ordinance, 2001.
The rate of tax to be deduction under section is 15 percent of the yield or profit. In case person is not on the Active Taxpayers List (ATL) the tax rate shall be increased by 100 percent.
The officials attributed the rise in tax collection to massive increase in bank deposits.
The bank deposits have reached to record high at Rs17.9 trillion by end of March 2021. The deposits of banking system increased by 18.38 percent as the total deposits were at Rs15.12 trillion by end March 2020.
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Tax rate at 15 percent applicable on profit on debt: FBR
ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday said that the general rate of tax is 15 percent on yield on investments. However, it is reduced at 10 percent where annual profit is below Rs500,000.
The FBR issued Income Tax Circular No. 07 of 2020 to clarify tax rate under Section 151 of the Income Tax Ordinance, 2001.
The FBR said: “General rate of tax deduction on profit on dent under Section 151 of the Income Tax Ordinance, 2001 is 15 percent of the profit.
“However, provision to the Division IA of the Part III of the First Schedule to the Income Tax Ordinance, 2001, provides that tax rate shall be 10 percent in case where the taxpayer furnishes a certificate to the payer of the profit on debt that during the tax year, total yield or profit payable in this case shall remain at Rs500,000 or less.”
The FBR said that queries had been received regarding the nature or format of the certificate.
“The required certificate is to be furnished by the recipient of the profit on debt to the payer of such profit to the effect that total profit on debt received/receivable during the tax year from all investments in his case shall not exceed Rs500,000,” the FBR said, adding that the requisite certificate can be submitted on plain paper.
According to the withholding tax card for tax year 2021 issued by the FBR, the profit on debt may be on account of deposit, account or a certificate under the National Saving Schemes or Post office savings account.
Besides, the same rates shall be applicable on profit on debt paid by a banking company or financial institution on account or deposit maintained.
Furthermore, the tax rates are also applicable on profit on bonds, certificates, debentures, securities or instruments of any kind (other than loan agreements between borrowers and banking companies or development financial institutions.
The tax rate of 15 percent shall be increased by 100 percent to 30 percent for persons not appearing on Active Taxpayers List (ATL).
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TAX YEAR 2021: tax rate on profit on bank deposits
KARACHI: Federal Board of Revenue (FBR) has updated rate of tax on profit on debt applicable during tax year 2021 (July 01, 2020 to June 30, 2021).
The FBR issued Income Tax Ordinance, 2001 (updated June 30, 2020) after incorporating amendments introduced through Finance Act, 2020. The FBR updated the rate of tax to be deducted under section 151 shall be 15 percent of the yield or profit:
Provided that the rate shall be 10 percent in cases where the taxpayer furnishes a certificate to the payer of profit that during the tax year yield or profit paid is rupees five hundred thousand rupees or less.
According to the Section 151 of the Ordinance, 2001, the Profit on debt. — (1) Where –
(a) a person pays yield on an account, deposit or a certificate under the National Savings Scheme or Post Office Savings Account;
(b) a banking company or financial institution pays any profit on a debt, being an account or deposit maintained with the company or institution;
(c) the Federal Government, a Provincial Government or a Local Government pays to any person profit on any security other than that referred to in clause (a) issued by such Government or authority; or
(d) a banking company, a financial institution, a company referred to in sub-clauses (i) and (ii) of clause (b) of sub-section (2) of section 80, or a finance society pays any profit on any bond, certificate, debenture, security or instrument of any kind (other than a loan agreement between a borrower and a banking company or a development finance institution) to any person other than financial institution.
the payer of the profit shall deduct tax at the rate specified in Division IA of Part III of the First Schedule from the gross amount of the yield or profit paid as reduced by the amount of Zakat, if any, paid by the recipient under the Zakat and Ushr Ordinance, 1980 (XVII of 1980), at the time the profit is paid to the recipient.
(2) This section shall not apply to any profit on debt that is subject to sub-section (2) of section 152.
“(3) Tax deductible under this section shall be a minimum tax on the profit on debt arising to a taxpayer, except where —
(a) taxpayer is a company; or
(b) profit on debt is taxable under section 7B.