Section 151 — Bank Profit Tax at a Glance
No minimum threshold. Deducted by the bank when profit is credited — regardless of account balance size.
On gross profit credited. Advance tax — creditable against total income tax liability in annual return.
Double the filer rate. On Rs. 500,000 annual profit: filer pays Rs. 75,000; non-filer pays Rs. 150,000.
Which Savings Products Does Section 151 Cover?
Section 151 applies to profit paid by banks and financial institutions on a wide range of deposit and savings products:
| Product | Section 151 Applies? | When WHT Deducted |
|---|---|---|
| Savings Account (PLS) | Yes | When profit credited (monthly/quarterly) |
| Current Account (no profit) | No — no profit paid | Not applicable |
| Term Deposit Receipt (TDR) | Yes | At maturity or when profit credited |
| Fixed Deposit (FDR) | Yes | At maturity or rollover |
| National Savings Certificates (NSC) | Yes | When profit paid |
| Defence Savings Certificates (DSC) | Yes | At maturity |
| Islamic Banking (Murabaha/Musharakah profit) | Yes | When profit distributed |
| Mutual Fund dividend / income | Section 150 | When dividend paid |
Worked Examples — Bank Profit Tax at Different Savings Levels
The following examples assume 12% annual profit rate on savings (for illustration only — actual bank rates vary):
| Savings Balance | Annual Profit (12%) | Filer WHT (15%) | Non-Filer WHT (30%) | Annual Saving (Filer) |
|---|---|---|---|---|
| Rs. 500,000 | Rs. 60,000 | Rs. 9,000 | Rs. 18,000 | Rs. 9,000 |
| Rs. 1,000,000 | Rs. 120,000 | Rs. 18,000 | Rs. 36,000 | Rs. 18,000 |
| Rs. 5,000,000 | Rs. 600,000 | Rs. 90,000 | Rs. 180,000 | Rs. 90,000 |
| Rs. 10,000,000 | Rs. 1,200,000 | Rs. 180,000 | Rs. 360,000 | Rs. 180,000 |
| Rs. 20,000,000 | Rs. 2,400,000 | Rs. 360,000 | Rs. 720,000 | Rs. 360,000 |
For anyone with significant savings, the annual difference between filer and non-filer bank profit tax alone — even before property or cash withdrawal benefits — makes registration and filing financially worthwhile.
Section 151 — Advance Tax, Not Final Tax
A common misconception is that the 15% or 30% deducted by the bank is a final tax on savings profit. It is not — it is an advance tax:
- Bank profit must be declared as income in your annual FBR return under "Income from Other Sources."
- The gross profit (before WHT) is added to your total income for the year.
- Your income tax is computed on the total — applying the relevant slab rate.
- The Section 151 WHT already deducted is credited against the computed tax.
- If the 15% WHT exceeds the slab-rate tax on that profit, the difference is refundable.
Example: Filer with Rs. 500,000 annual bank profit only
Gross profit: Rs. 500,000
Section 151 WHT paid: 15% = Rs. 75,000
Annual income tax owed at business slab on Rs. 500,000: Rs. 0 (below Rs. 600,000 threshold)
WHT credit applied: Rs. 0 (no tax to offset)
→ Refund claim: Rs. 75,000
→ Filing the return recovers the full Rs. 75,000 already deducted
Zakat and Bank Profit Tax — How They Interact
Zakat and Section 151 income tax are two completely separate deductions — one religious obligation, one state tax:
| Feature | Zakat | Section 151 WHT (Income Tax) |
|---|---|---|
| Authority | Zakat & Ushr Ordinance 1980 | Income Tax Ordinance 2001 — FBR |
| Rate | 2.5% of balance above Nisab | 15% (filer) / 30% (non-filer) on profit |
| Applied on | Account balance on 1st Ramadan | Profit earned — when credited |
| Exemption available? | Yes — CZ-50 declaration form | Only through filer status change |
| Credits against income tax? | No | Yes — advance tax creditable in return |
If you are non-Muslim or wish to handle Zakat personally, submit the CZ-50 declaration form at your bank branch to stop automatic Zakat deduction. This does not affect Section 151 WHT — income tax on bank profit applies separately regardless.
Islamic Banking Profit — Is It Taxed the Same Way?
Profit earned on Islamic banking products — Murabaha, Musharakah, Mudarabah-based savings, and current accounts offered by Islamic banks or Islamic banking windows — is treated identically to conventional savings account profit for income tax purposes in Pakistan.
- Section 151 WHT applies at 15% (filer) or 30% (non-filer) on all profit distributed.
- Islamic banks are withholding agents under the same provisions.
- Profit from Islamic savings products is declared under "Income from Other Sources" in the same way as conventional savings profit.
- No special exemption exists for profit from Shariah-compliant deposits under the Income Tax Ordinance.
Term Deposits (TDR/FDR) and National Savings — Tax Treatment
Section 151 WHT deducted at maturity or when profit is credited. For multi-year TDRs, WHT may be deducted in full at maturity — which means a large single-year WHT deduction even though the profit was earned over multiple years. Declare the full profit in the return for the year of receipt.
National Savings Centre products (Bahbood Certificates, Regular Income Certificates, Special Savings Certificates, Defence Savings Certificates) are also subject to Section 151 WHT on profit payments. Rates: 15% filer / 30% non-filer. Declare profit from NSC products in your return the same way as bank profit.
How to Declare Bank Profit in Your FBR Annual Return
- Obtain your annual bank profit statement or certificate — request from your bank showing gross profit and total Section 151 WHT deducted for the year (July 1 – June 30).
- Log in to FBR IRIS and open your annual income tax return.
- Navigate to Income from Other Sources → Bank Profit / Profit on Savings.
- Enter the gross profit amount (before WHT). Do not enter the net amount — enter the full gross figure.
- Navigate to Advance Taxes Paid → Section 151.
- Enter the total Section 151 WHT deducted during the year.
- IRIS adds the profit to your total income, computes tax at the applicable slab rate, and credits the 15% WHT already paid.
- If WHT exceeds the slab-rate tax on the profit (common for lower-income earners), the excess becomes a refund claim.
Common Savings Account Tax Mistakes in Pakistan
- Not updating bank records with filer status — bank deducts 30% instead of 15% indefinitely.
- Entering net profit (after WHT) in the return instead of gross profit — understates income and misses the WHT credit.
- Assuming Section 151 is a final tax — not filing a return and losing the refund opportunity for lower-income savers.
- Confusing Zakat deduction with income tax — they are separate; Zakat exemption (CZ-50) does not affect income tax WHT.
- Not collecting annual profit statement from bank — needed to determine gross profit and WHT amount for IRIS declaration.
- Not declaring profit from National Savings certificates alongside bank profit — all profit-bearing instruments require declaration.
Related Banking Tax Guides
Useful Tax Tools & Guides
Estimate income tax with bank profit added to total income.
Tax SlabsFBR Tax Slabs 2025-26Slab rates applied to bank profit income in returns.
NTNApply NTN OnlineRegister free to halve your bank profit WHT rate.
VerifyNTN VerificationConfirm ATL status for bank to apply 15% rate.
FilingHow to File ReturnDeclare gross profit and recover WHT refunds.
PropertyProperty Tax PakistanFiler status also halves WHT on property deals.
Official FBR Resources
Frequently Asked Questions
What is the tax on savings account profit in Pakistan?
Section 151 WHT — 15% for ATL filers, 30% for non-filers — deducted by the bank when profit is credited. No minimum threshold. Applies to all savings accounts, TDRs, FDRs, and National Savings products.
Is bank profit tax a final tax in Pakistan?
No — it is an advance tax. Declare gross profit in your annual FBR return, credit the 15% WHT already paid, and claim a refund if WHT exceeds your total income tax owed.
Does Zakat reduce my bank profit income tax?
No. Zakat and income tax are completely separate. Zakat is 2.5% on balance on 1st Ramadan (exemptable via CZ-50). Section 151 income tax on profit applies independently regardless of Zakat status.
Is Islamic banking profit taxed the same way?
Yes. Profit from Murabaha, Musharakah, or any Islamic banking deposit product is taxed at the same Section 151 rates — 15% filer / 30% non-filer. No religious exemption exists under the Income Tax Ordinance.
Can I claim a refund of Section 151 WHT?
Yes — if your total income tax owed is less than the 15% WHT already deducted. Common for lower-income savers with significant bank profit. File your return, declare gross profit, credit the WHT, and submit a refund claim through IRIS.
How do I get my bank to apply the 15% filer rate?
Register on FBR IRIS, file any return to get on the ATL, verify status at atl.fbr.gov.pk, then visit your bank branch with CNIC and ATL printout. Request they update your account to reflect filer status for lower Section 151 WHT application.
Summary
Section 151 withholding tax on bank profit applies to all savings accounts, TDRs, and National Savings products — 15% for ATL filers, 30% for non-filers — deducted by the bank when profit is credited. It is an advance tax, not a final tax. Declare gross profit in your annual return, credit the WHT, and potentially claim a refund if your income tax slab rate is below 15%.
For significant savers, the annual saving from filer status on Section 151 alone can reach Rs. 90,000–360,000 at common savings levels. Register on FBR IRIS, file any return, and inform your bank.