Investments · Section 151 · Tax Year 2026-2027
Bank Profit Tax Calculator — Profit on Debt
Calculate the withholding tax on bank profit, savings certificates and government securities under Section 151 — 20% for filers and 40% for non-filers on bank deposits, 15%/30% on National Savings, bonds and certificates.
Step by step
How profit on debt is taxed
Enter the profit amount
The gross interest or profit credited to you before deduction.
Choose your filer status
Bank deposits: filers 20%, non-filers 40%. Switch the rate to 15%/30% for National Savings, Post Office or bond profit.
See the tax withheld
Your bank or institution deducts this before crediting your account.
Check your net profit
What actually reaches your account after withholding.
Good to know
Profit on debt essentials
Applies across accounts
Savings accounts, term deposits, National Savings certificates and government bonds are all covered.
Deducted automatically
Your bank withholds the tax before crediting your profit — you don't file or pay it separately.
Filer status matters most
The single biggest lever on this tax is being an active filer — it more than halves the rate.
Reading the result
One deduction, several different products
"Profit on debt" is broader than a savings account. It reaches term deposits, National Savings certificates, government securities, and the return paid on an Islamic deposit where the substance is a return on money placed with an institution.
Naming it differently does not change the treatment. The provision follows what the payment is for, not the label the product carries.
The deduction is on profit paid, not on your balance
A common worry is that the bank is taxing savings themselves. It is not — the charge attaches to the profit credited. A dormant balance earning nothing generates no deduction.
Where Zakat is also deducted, that is a separate matter under the Zakat and Ushr Ordinance and comes off the principal on 1 Ramadan, not off the profit. Two different deductions, two different bases, and it is worth reading the statement carefully enough to tell them apart.
Non-filer cost compounds on regular income
The gap between the two rates here is one of the widest on the withholding schedule, and profit is credited repeatedly — monthly, quarterly, at maturity. For a retiree living on certificate income, ATL registration is usually the single largest recoverable saving available.
Where this stops
This applies a rate to a profit figure. Whether the deduction settles your liability or is credited against a wider computation depends on the amount and your overall position, and that distinction decides whether filing recovers anything.
FAQs
Profit on debt tax FAQs
What counts as "profit on debt"?
Interest or profit paid on bank deposits, savings certificates (e.g. Defence/Regular Income Certificates), government securities, and similar debt instruments — covered under Section 151 of the Income Tax Ordinance.
What is the withholding rate?
Profit on a bank or financial-institution deposit is withheld at 20% for filers and 40% for non-filers. National Savings and Post Office schemes, bonds, certificates and other debt instruments are 15% and 30%. Government securities are 15%/30% for individuals and 20%/40% for companies and AOPs. Tax Year 2026-2027 card, Finance Act 2026.
Is this a final tax?
For most individuals whose profit on debt does not exceed the threshold set for taxation as a separate block, this withholding is treated as a final tax and is not merged with salary or business income at slab rates. Larger amounts may be taxed differently — confirm with a tax advisor.
Does this apply to Islamic banking profit too?
Yes — profit distributed on Shariah-compliant deposit and investment accounts is generally treated the same way as conventional bank profit for withholding purposes.
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Compare with dividend income
Dividends, mutual funds and sukuk profit each have their own withholding rates.
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