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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.
(1A) Every special purpose vehicle or a company, at the time of making payment of a return on investment in sukuks to a sukuk holder shall deduct tax from the gross amount of return on investment at the rate specified in Division IB of Part III of the First Schedule.
(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.
(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.
(1A) Every special purpose vehicle or a company, at the time of making payment of a return on investment in sukuks to a sukuk holder shall deduct tax from the gross amount of return on investment at the rate specified in Division IB of Part III of the First Schedule.
(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.
Amendment history (16)
- The words “resident company” substituted by the Finance Act, 2009.
- Inserted by the Finance Act, 2021.
- Section 150A omitted by the Finance Act, 2021. The omitted section
- Clause (a) substituted by the Finance Act, 2003. The substituted clause (a)
- The word “and” substituted by the Finance Act, 2003.
- The word “or” omitted by the Finance Act, 2002.
- Clause (c) substituted by the Finance Act, 2002. The substituted clause (c)
- The words “local authority” substituted by the Finance Act, 2008.
- The commas and words “, other than a financial institution,” omitted by the Finance Act, 2003.
- Inserted by the Finance Act, 2003.
- Added by the Finance Act, 2002.
- The words, letters and brackets “clauses (a) and (b)” substituted by the Finance Act, 2003.
- Sub-section (1A) inserted by the Finance Act, 2021.
- Substituted by the Finance Act, 2015. The substituted sub-section (3)
- The word “final” substituted through Finance Act, 2019.
- Section 151A inserted by the Finance Act, 2025.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
Source FBR PDF page 316
Unofficial reference, compiled from the FBR’s consolidated Income Tax Ordinance 2001 (amended up to 30 June 2026). Provided for general information only — not an official FBR publication and not legal or tax advice. Always verify against the official FBR text before relying on it for filing or any decision.