Final withholding tax on bank profit, 15% for filers.
Withholding tax
—
Tax rate
—
Net profit
—
The tax your bank takes before crediting your profit
When a Pakistani bank pays you profit on a savings account, term deposit, or other interest-bearing instrument, it does not hand over the full amount. It deducts withholding tax on the profit on debt and pays the FBR directly, crediting only the balance to your account. For most individuals this deduction is a final tax, meaning it closes off the liability on that profit rather than acting as an advance against a bigger bill. This calculator shows you the tax taken and the profit you actually keep, and it hinges on one switch: filer or non-filer.
Why a non-filer loses more than a third
Profit on debt carries one of the widest filer penalties in the whole system. The rate this calculator applies is 15 percent for a filer on the Active Taxpayer List, against 35 percent for a non-filer. So a non-filer surrenders more than a third of their interest income before it ever lands, while a filer keeps 85 paisa of every rupee of profit. These are the figures the FBR (Federal Board of Revenue) has applied to profit on debt under recent budgets, and they move with the annual Finance Act, so verify the current percentages with the FBR rather than treating them as fixed. The 20-point gap is the engine of the policy: it pushes savers onto the Active Taxpayer List by making it expensive to stay off.
What "final tax" means for your return
Because the deduction is treated as a final tax for most individuals, you are not taxed again on that profit at your normal slab rate, and you do not need to gross it up into your salary or business income for a second bite. The bank's certificate of tax deducted is your proof. That said, you should still record the income and the tax in your filing, both to stay on the Active Taxpayer List and because the final-tax treatment is not universal, as the next point explains.
PKR 300,000 of bank profit, filer versus non-filer
Imagine you earned PKR 300,000 of profit on a term deposit over the year. As a filer, the tool applies 15 percent, so PKR 45,000 is withheld and you keep PKR 255,000. As a non-filer, 35 percent is taken, so PKR 105,000 goes to tax and you are left with PKR 195,000. Filing, in this example, is worth PKR 60,000 of extra profit kept on the very same deposit.
| Item | Filer (15%) | Non-filer (35%) |
|---|
The chart in the results panel shows the tax withheld and net profit retained for the selected filer status.
Who should run this, and an edge case to watch
This tool fits any saver with bank profit: a retiree living off term deposits, a household with an emergency fund earning interest, or a freelancer parking cash. The tip worth acting on is to compare the cost of staying a non-filer against the modest effort of filing, because for most depositors the maths overwhelmingly favours getting onto the Active Taxpayer List. The edge case to watch: the simple final-tax treatment is built for ordinary profit on debt. Where annual profit is very large, it can fall outside the final-tax regime and be charged under normal rules instead, so high earners should confirm their position with the FBR rather than assuming the flat rate applies to every rupee.
Is profit from Behbood and pensioner certificates taxed at this rate too?
No. National Savings instruments aimed at pensioners and widows, such as Behbood certificates, are taxed at a reduced rate rather than the standard profit-on-debt rate, which is why a separate calculator exists for them. If your profit comes from those schemes, do not use the 15 or 35 percent figures here. Check the reduced rate that applies to that specific certificate.
Does this apply to Islamic banking profit as well?
Profit paid by Islamic banks on deposits is generally treated the same way as conventional profit on debt for withholding purposes, since the tax follows the economic substance of the return rather than the label. The bank deducts at the applicable filer or non-filer rate before crediting your account. As always, the precise treatment can shift with the Finance Act, so confirm with your bank and the FBR.