Tax on Bank Profit in Pakistan: 2026-27 Filer Rates

For Pakistan's 2026–27 financial year, a bank or financial institution generally deducts 20% from profit paid on an account or deposit when the recipient appears on the Active Taxpayers' List. If the recipient is not on the ATL, the rate generally doubles to 40%.

That is not the rate for every product commonly called a savings investment. Profit from a National Savings Scheme or Post Office Savings Account generally falls into the 15% “other cases” rate, which becomes 30% for someone not on the ATL. A large number of online explanations still mix these categories or repeat an older 15% bank-deposit rate.

Quick answer: For Tax Year 2027, ordinary profit on a bank or financial-institution account or deposit is generally taxed at source at 20% for an ATL person and 40% for a person not on the ATL. National Savings and most other profit-on-debt cases are generally 15% and 30%, respectively. For an individual or AOP with annual profit on debt not exceeding PKR 5 million, section 7B generally makes the tax final. Above PKR 5 million, the treatment changes and the withholding amount may not settle the final liability.

This guide explains the general federal rules. Your status, product, exemptions and total profit can change the return treatment, so use a tax professional for a material amount or unusual account.

Bank profit tax rates for 2026–27 at a glance

Pakistan's financial year from 1 July 2026 to 30 June 2027 corresponds to Tax Year 2027 for a normal individual tax year.

The source is the Income Tax Ordinance, 2001, amended through 30 June 2026. Division IA of Part III of the First Schedule sets withholding under section 151 at 20% for bank/financial-institution accounts and deposits, 20% for specified government-security profit paid to a person other than an individual, and 15% in other cases. Rule 1 of the Tenth Schedule increases the applicable rate by 100% for a person not appearing on the ATL.

The rates in the table assume no special exemption, reduced rate or non-resident-account rule applies.

Special National Savings products do not follow the general table

The broad 15%/30% National Savings rule has important exceptions. The Second Schedule disapplies section 151 withholding for profit paid on Bahbood Savings Certificates, Pensioners' Benefit Accounts and Shuhada Family Welfare Accounts in the specified cases, while a separate provision caps the tax payable on that profit at 5%. The official Bahbood product page also states that withholding tax is not collected on its profit.

That does not make every National Savings product tax free. Eligibility restrictions and the exact scheme name matter, so verify the product certificate and current National Savings/FBR treatment instead of extending this exception to an ordinary Savings Account or certificate.

Why do some websites still say 15% and 30%?

They may be using one of three outdated or incomplete shortcuts:

1. The ordinary bank-deposit rate was 15% before it increased to 20%.
2. National Savings and other cases still use 15%, so a source may wrongly apply that rate to every account.
3. Older material may quote a separately listed non-filer rate rather than the current Tenth Schedule doubling mechanism.

FBR's Circular No. 01 of 2025–26 explains the change: profit from deposits in banks and financial institutions increased from 15% to 20%, while National Savings and Post Office savings remained unchanged. It also explains that the non-ATL rate is produced by the 100% increase under the Tenth Schedule.

The consolidated Ordinance through 30 June 2026 retains those rates for Tax Year 2027.

What counts as “bank profit”?

Section 151 covers tax deduction when a banking company or financial institution pays profit on debt relating to an account or deposit. In everyday terms, that commonly includes:

• Savings-account profit.
• Profit-and-loss-sharing account distributions.
• Fixed or term-deposit profit.
• Certificates of deposit issued by a covered institution.
• Similar returns credited on money placed with a bank or financial institution.

The tax is on the profit, not on the principal deposited.

If you place PKR 1,000,000 in a deposit and the bank credits PKR 100,000 of profit, the withholding calculation starts from the PKR 100,000 profit—not the PKR 1,100,000 balance.

Tax withheld = taxable profit credited × applicable withholding rate

Net profit received = taxable profit credited − tax withheld

The statutory definition of “profit on a debt” includes profit, yield, interest, discount, premium and certain related amounts owing under a debt, other than a return of capital. Product wording still matters, so use the bank's annual tax certificate for the actual classification it reported.

Filer versus non-filer: what the terms really mean

People often use “filer” casually to mean that they once submitted a tax return. For withholding purposes, the practical question is whether the person's name appears on FBR's Active Taxpayers' List when the bank applies the relevant status.

The higher rate is not a separate bank charge. The bank deducts it for FBR under the tax law.

Check your ATL status through FBR's official services before a major profit payment. If you file or reactivate later, do not assume the bank will automatically reverse a deduction already made. Ask the bank and a tax adviser what correction or return process, if any, applies to your facts.

Worked examples

Example 1: ATL individual with savings-account profit

Suppose a bank credits PKR 120,000 of profit during Tax Year 2027 and the account holder appears on the ATL.

Gross bank profit:     PKR 120,000
Withholding at 20%:    PKR  24,000
Net profit credited:   PKR  96,000

The effective after-tax yield is 80% of the quoted gross yield before considering Zakat, account fees and inflation.

If the deposit was PKR 1,000,000 and gross profit was PKR 120,000:

Gross return = 120,000 ÷ 1,000,000 = 12.0%
After-WHT return = 96,000 ÷ 1,000,000 = 9.6%

This is a tax illustration, not a current bank rate.

Example 2: Person not on the ATL

Using the same PKR 120,000 profit:

Gross bank profit:     PKR 120,000
Withholding at 40%:    PKR  48,000
Net profit credited:   PKR  72,000

The after-WHT return in the simplified example becomes 7.2% on the PKR 1,000,000 principal.

Example 3: National Savings profit

Suppose an individual receives PKR 120,000 from a National Savings instrument and no special concession applies.

This is why “tax on profit” cannot be answered correctly without identifying the institution and instrument. Read AsaasIQ's National Savings Schemes guide for product-level background.

Example 4: Monthly credit versus annual profit

If a bank credits PKR 10,000 each month, it may deduct tax on each credit:

Monthly profit:             PKR 10,000
Monthly WHT at 20%:         PKR  2,000
12-month gross profit:      PKR 120,000
12-month total WHT:         PKR 24,000

Changing the payment frequency does not, by itself, change the annual economics. Reconcile the sum of monthly entries with the annual tax certificate.

Is the tax final or adjustable?

This question is where many simplified calculators become misleading.

Annual profit on debt up to PKR 5 million

Section 7B generally applies to a person other than a company who receives profit on debt covered by section 151. It taxes the gross profit at the relevant First Schedule rate. Section 8 treats tax imposed under section 7B as final.

Section 7B does not apply when annual profit on debt exceeds PKR 5 million. Therefore, for an individual or AOP within the threshold and without an exemption, the tax is generally a final tax on that profit rather than a simple advance payment against ordinary slab tax.

“Final” does not mean “do not disclose it.” The income and tax deduction still need to be reflected correctly in the tax return and wealth reconciliation.

Annual profit on debt above PKR 5 million

Once profit on debt exceeds PKR 5 million, section 7B's final-tax treatment no longer applies. Section 151 says the deduction is a minimum tax except where the taxpayer is a company or the profit is taxable under section 7B.

In practical terms:

• The bank may still withhold at the applicable section 151 rate.
• The annual return calculation may produce additional liability under the normal provisions.
• The treatment applies to the taxpayer's annual profit on debt, not simply one bank account viewed in isolation.
• Other income, status and deductions can affect the final computation.

Do not use “PKR 5 million” as a reason to divide beneficial ownership among relatives on paper. Accounts, funds and income should belong to the person whose name and tax return genuinely reflect the investment. For profit near or above the threshold, obtain a calculation from a qualified Pakistan tax practitioner.

Does Zakat reduce the amount used for withholding tax?

Section 151 states that the payer deducts from gross yield or profit as reduced by Zakat, if any, paid by the recipient under the Zakat and Ushr Ordinance, 1980.

This is narrower than saying that any personal Zakat payment can be subtracted automatically. Ask the bank how it applied Zakat to the relevant profit payment and retain the deduction evidence.

For the separate religious calculation, use AsaasIQ's guide to calculating Zakat on investments in Pakistan. Zakat, income-tax withholding and the account's ex-Zakat declaration are different issues.

What about Islamic bank accounts?

An Islamic savings or term-deposit product may use Mudarabah or another Shariah structure rather than a conventional interest contract. For withholding administration, banks commonly deduct income tax from profit distributed on the account under the profit-on-debt framework.

Do not infer the tax rate solely from the word “Islamic.” Check:

• The legal product and account type.
• The gross profit shown on the statement.
• Zakat deducted, if any.
• Income tax withheld.
• The section and rate on the annual tax certificate.

Shariah classification and federal income-tax classification answer different questions. If the tax certificate uses an unexpected rate, ask the bank for a written explanation.

Bank deposits versus other income investments

The same gross return can produce a different net result because tax and risk differ.

Do not choose an investment only because one column shows a lower withholding rate. Compare after-tax return, access, price volatility, liquidity, fees and capital risk.

AsaasIQ's savings account versus money-market fund comparison and Sukuk investing guide can help you compare the structures.

How to calculate your after-tax bank return

Use the bank's gross annual profit rate, not the amount that arrived after deductions.

Estimated gross profit = eligible balance × gross annual profit rate × time fraction

Estimated WHT = gross profit × applicable rate

Estimated net profit = gross profit − WHT − account fees − other deductions

For a variable-rate savings account, the bank may calculate profit using daily balances and different rates during the year. A simple annual formula is only an estimate.

To compare purchasing-power growth:

Approximate real return ≈ after-tax nominal return − inflation

For the underlying mechanics of that adjustment, see Real Return Calculator: Adjust Returns for Inflation.

How to verify what your bank deducted

At the end of the tax year—or before filing—obtain a bank profit and tax certificate covering 1 July to 30 June. Check:

• Account holder's name and CNIC/NTN.
• Account and branch identifiers.
• Gross profit credited.
• Zakat deducted.
• Income tax deducted.
• Dates and applicable rate.
• Whether all accounts at that bank are included.

Then compare it with:

1. Monthly or quarterly account statements.
2. FBR's withholding records where available.
3. Your return and wealth statement.
4. Certificates from every other bank or institution.

If the bank used 40% while you believe you appeared on the ATL, first verify the exact ATL status and date, then raise a documented query with the bank. Do not alter the number in your return without reconciling what was actually withheld and deposited.

Can you claim a refund?

Do not assume that every bank-profit deduction is refundable merely because it appears as withholding.

For profit within section 7B's final-tax regime, the deduction generally settles the tax on that income. Above the threshold or under a special regime, the tax can interact differently with the return. A person who was subjected to the doubled non-ATL rate may also face a specific return and assessment process.

Section 169(4) adds an important nuance: where the underlying tax is final, the amount collected because of the Tenth Schedule's non-ATL uplift can be adjustable if the person files the relevant return before the assessment is finalised. That is not an automatic bank reversal or a guaranteed cash refund; the timing, return and assessment position must satisfy the law.

Whether an amount is adjustable or refundable depends on the applicable provision and the taxpayer's full facts. Treat online statements such as “all bank tax is adjustable” or “non-filers can never recover anything” as oversimplifications. Use the certificate and current Ordinance with a tax adviser.

Legal ways to improve the after-tax result

There is no legitimate trick that makes taxable bank profit disappear. Useful actions are ordinary compliance and comparison:

1. File accurately and keep your ATL status current before profit is paid.
2. Compare after-tax yields rather than headline profit rates.
3. Match deposit tenor with the date you need the money.
4. Check early-encashment penalties and rate changes.
5. Use genuine ownership; do not park money in someone else's name to manufacture a lower tax result.
6. Keep total annual profit records across all institutions, especially near PKR 5 million.
7. Consider alternatives only after comparing risk, liquidity, fees and tax.
8. Retain profit and withholding certificates for the return and wealth reconciliation.

Common errors

• Applying 15%/30% to an ordinary bank deposit in 2026–27.
• Applying 20%/40% to every National Savings product without checking the instrument.
• Missing the special treatment for eligible Bahbood, Pensioners' Benefit and Shuhada Family Welfare products.
• Calculating tax on the principal plus profit instead of profit alone.
• Treating “filed once” as proof of current ATL status.
• Assuming monthly credits avoid the annual PKR 5 million rule.
• Calling all withholding adjustable.
• Treating Zakat and income tax as the same deduction.
• Comparing a bank deposit with a mutual fund using only the advertised yield.
• Ignoring certificates from smaller or dormant accounts.
• Moving money into a relative's account while retaining beneficial ownership.

Frequently asked questions

What is the tax on bank profit in Pakistan for 2026–27?

For an ordinary account or deposit with a bank or financial institution, the general rate is 20% when the recipient appears on the ATL and 40% when the recipient does not. Special accounts and exemptions can differ.

What is the non-filer tax on savings-account profit?

The Tenth Schedule generally increases the applicable section 151 rate by 100% for a person not on the ATL. A 20% bank-deposit rate therefore becomes 40%.

Is National Savings profit taxed at 20%?

For an ordinary individual case, National Savings and Post Office savings generally fall under the 15% “other cases” rate, which becomes 30% when the person is not on the ATL. Check the exact scheme and any special exemption.

Is Bahbood or a Pensioners' Benefit Account taxed at 15%?

Not under the ordinary section 151 withholding rule in the specified cases. Current Second Schedule provisions disapply that withholding for Bahbood Savings Certificates, Pensioners' Benefit Accounts and Shuhada Family Welfare Accounts and apply a separate 5% tax cap. Confirm that you and the exact product qualify.

Is tax charged on my bank balance?

No. Section 151 withholding applies to profit or yield, not the return of your principal. Zakat, account charges and other rules may separately affect the balance.

Is bank-profit tax final for a filer?

For an individual or AOP with annual profit on debt not exceeding PKR 5 million, section 7B generally applies and section 8 treats that tax as final. Above PKR 5 million, section 7B does not apply and the return treatment changes.

What happens if bank profit exceeds PKR 5 million?

The section 7B final-tax regime no longer applies. Withholding may continue, but it can be a minimum tax rather than the complete annual liability. Obtain a professional calculation using all profit-on-debt and other income.

Do Islamic banks deduct the same tax?

Islamic banks commonly deduct federal income tax from profit credited on savings and term-deposit products. Confirm the rate and classification from the bank's tax certificate; Shariah structure does not by itself create an income-tax exemption.

Does Zakat reduce bank-profit tax?

Section 151 allows the withholding base to be reduced by Zakat, if any, paid by the recipient under the Zakat and Ushr Ordinance. The bank must apply this to the relevant payment; a separate personal Zakat estimate is not an automatic tax deduction.

How do I prove the tax already deducted?

Request an annual profit and tax certificate from every bank or institution, reconcile it to statements and FBR records, and retain it with the return and wealth statement.

Bottom line

For an ordinary Pakistan bank deposit in Tax Year 2027, remember the core distinction:

Bank or financial-institution deposit: 20% ATL / 40% non-ATL
National Savings and most other cases: 15% ATL / 30% non-ATL
Specified Bahbood/Pensioners/Shuhada products: special 5% treatment

Then check whether annual profit on debt stays within PKR 5 million, because that determines whether section 7B's final-tax treatment generally applies. The institution, product, ATL status and annual total all matter more than the word “savings.”

Disclaimer: This article is general educational information and does not replace advice from FBR, your bank or a qualified tax practitioner. Rates and interpretations can change; verify the current consolidated law when making or filing a material transaction.