The Federal Board of Revenue (FBR) is reportedly considering a proposal to increase tax rates on profits earned from bank deposits in the upcoming federal budget for 2025-26. This potential move is aimed at generating additional revenue, particularly to compensate for any tax relief that might be granted to salaried individuals.
According to official sources, the FBR is actively reviewing various measures to address a possible shortfall in tax collection. Raising taxes on passive income sources, such as profits accumulated from money held in bank accounts and other savings schemes by both individuals and companies, is one of the key steps under consideration.
Proposed Rate Adjustments
Currently, individuals who actively file their tax returns (filers) are subject to a 15% tax on profits derived from bank deposits. In contrast, those who do not file returns (non-filers) face a significantly higher rate of 35%. The FBR is now contemplating an increase of 2% for both categories. If approved, this would mean filers might have to pay 17%, while non-filers could face a tax rate of 37% on their deposit profits in the future.
This proposal emerges amidst ongoing discussions with the International Monetary Fund (IMF), which has reportedly urged Pakistan to present clear strategies for covering any potential revenue gaps that may arise from offering tax relief to certain sectors, particularly salaried workers. The previous year’s budget, introduced under the IMF program, saw higher taxes that, in some instances, led to a contraction in formal business activity and subsequently lower overall tax collection.
By focusing on passive income sources like profits from bank deposits, the government hopes to enhance its revenue streams without imposing further burdens on active business sectors. Given that a considerable number of individuals and companies rely on bank savings for secure returns, the FBR views this as a feasible method to boost national revenue.
Should this proposal be approved, the increased tax on deposits will impact both individual savers and corporate entities. Individuals and businesses are advised to review their bank investments and financial planning accordingly, especially those who heavily depend on income generated from deposits. The final decision regarding these tax adjustments is anticipated to be announced with the upcoming federal budget.
