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Certain payments by life insurance companies and takaful operators
(1) Every life insurance company, including a family takaful operator or a window takaful operator, making any payout, benefit, surrender value, maturity proceeds or similar payment to an individual under a life insurance policy, family takaful certificate, plan or arrangement shall, at the time of making such payment, deduct tax at the rate specified in Division IC of Part III of the First Schedule.
(2) For the purposes of sub-section (1), the amount liable to tax deduction shall be the gross amount of payout or benefit reduced by the aggregate amount of premiums or contributions paid by the policyholder or participant.
(3) The provisions of sub-section (1) shall not apply where the payout or benefit—
(a) is made on account of death of the insured or participant;
(b) is made on account of disability of the insured or participant; or (c) is made after completion of four years from the date of issuance of the policy, certificate or plan.
(4) Tax deducted under this section shall be treated as final tax on the income arising from such payout or benefit.
(2) For the purposes of sub-section (1), the amount liable to tax deduction shall be the gross amount of payout or benefit reduced by the aggregate amount of premiums or contributions paid by the policyholder or participant.
(3) The provisions of sub-section (1) shall not apply where the payout or benefit—
(a) is made on account of death of the insured or participant;
(b) is made on account of disability of the insured or participant; or (c) is made after completion of four years from the date of issuance of the policy, certificate or plan.
(4) Tax deducted under this section shall be treated as final tax on the income arising from such payout or benefit.
Amendment history (3)
- Section 151B inserted by the Finance Act, 2026.
- Substituted for the word “royalties” by the Finance Act, 2002.
- Inserted by the Finance Act, 2006.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
Source FBR PDF page 318
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.