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.
According to the notification, the tax rates have been specified for individuals and entities falling under the categories of Active Taxpayers List (ATL) and non-ATL.
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For individuals appearing on the ATL, the tax rate on profit from debt is set at 15 percent. However, for those not appearing on the ATL, the tax rate on profit from debt is higher, at 30 percent.
The specified tax rates apply to the following scenarios:
(a) National Savings Scheme or Post Office Savings Account: When an individual pays yield on an account, deposit, or a certificate under the National Savings Scheme or Post Office Savings Account, the tax rate of 15 percent will apply for ATL persons, and 30 percent for non-ATL persons.
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(b) Banking Companies and Financial Institutions: In cases where a banking company or financial institution pays any profit on a debt, such as an account or deposit maintained with the company or institution, the tax rate will be 15 percent for ATL persons and 30 percent for non-ATL persons.
(c) Government Securities: If the Federal Government, a Provincial Government, or a Local Government pays profit on any security other than those mentioned in clause (a), issued by such government or authority, the tax rates will be 15 percent for ATL persons and 30 percent for non-ATL persons.
(d) Bonds, Certificates, Debentures, and Securities: For banking companies, financial institutions, or finance societies paying profit on any bond, certificate, debenture, security, or instrument of any kind (excluding loan agreements between borrowers and banking companies or development finance institutions) to any person other than a financial institution, the tax rates will be 15 percent for ATL persons and 30 percent for non-ATL persons.
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In addition to the above, the FBR has also issued tax rates for profit on debt from Sukuk by Special Purpose Vehicles or companies. For ATL companies, the tax rate is set at 25 percent, whereas for non-ATL companies, it is 50 percent.
For individuals and Association of Persons (AOPs) returning above Rs 1 million, the tax rates are 12.5 percent for ATL and 25 percent for non-ATL.
Lastly, for individuals and AOPs with returns below Rs 1 million, the tax rates are 10 percent for ATL and 20 percent for non-ATL.
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These tax rates will play a crucial role in shaping the investment decisions of individuals and businesses, as well as in promoting transparency and compliance within the tax system in Pakistan.
Please note that the specified tax rates are in compliance with the Income Tax Ordinance, 2001, and individuals and entities are advised to consult with tax experts or financial advisors to fully understand their tax liabilities and obligations under these new rates.
