In the FBR Income Tax Return for the Tax Year 2025, one of the most common sources of income for salaried individuals, pensioners, and freelancers is profit earned from their bank accounts, deposits, and savings certificates. This is taxed under Section 151 of the Income Tax Ordinance, 2001, titled “Profit on Debt”.
In this article, I will explain, what is Profit on Debt under Section 151, tax rates applicable in 2025, difference between final tax and normal tax regime (NTR), where to declare income in the FBR IRIS portal, what to do if your profit exceeds Rs. 5 million, and common mistakes and penalties.
What is Profit on Debt (Section 151)?
Profit on Debt refers to income you earn from bank accounts, term deposits, savings schemes (like Behbood, Regular Income Certificates), and other interest-bearing securities.
When you earn profit from these sources, the bank or institution automatically deducts tax at the time of payment. This is called tax deduction at source. This deduction is called withholding tax (WHT) under Section 151(1)(b).
FBR Tax Rates on Profit on Debt for 2025
Here are the tax rates on profit on debt in the yea 2025:
| Annual Profit on Debt | Tax Rate | Tax Type |
|---|---|---|
| Up to Rs. 5,000,000 | 15% | Final Tax (Fixed) |
| Above Rs. 5,000,000 | Slab-based (15% to 35%) | Normal Tax Regime (NTR) |
Where to Declare Bank Profit in Income Tax Return?
In FBR’s IRIS portal, declaration depends on amount earned:
Case 1: Profit Up to Rs. 5 Million
- Go to: Income → Final / Fixed Tax → Profit on Debt u/s 151(1)(b)
- Enter: Total profit earned (max Rs. 5,000,000)
- The system will treat it as Final Tax — you don’t pay anything extra
Case 2: Profit Exceeding Rs. 5 Million
- Go to: Income → Profit on Debt → Normal Tax Regime (NTR)
- Enter: Full profit amount (even if partial amount is below 5M)
- Go to: Tax Already Paid → Withholding Tax → u/s 151(1)(b)
- Enter: The amount of tax already deducted by the bank
Then FBR will:
- Add profit to your taxable income
- Apply slab rates (15% to 35%)
- Adjust your WHT
- Ask for the difference (if tax payable > WHT)
Example Calculation
Let’s say you earned Rs. 6,000,000 as profit from deposits:
| Detail | Amount |
|---|---|
| Total Profit | Rs. 6,000,000 |
| Bank Deducted WHT | Rs. 900,000 (15%) |
In this case:
- You must declare Rs. 6 million under NTR
- Enter Rs. 900,000 in WHT section
- FBR may calculate actual tax as per your slab (maybe 20% or more)
- You pay the difference if tax > 900,000
What Mistakes to Avoid?
| Mistake | Risk |
|---|---|
| Entering Rs. 6M under Final Tax | FBR may disallow your return |
| Not declaring profit at all | Penalty or Audit |
| Claiming refund without proof of WHT | Will get rejected |
Documents You Should Keep (In Case of Audit)
- Bank certificates showing total profit earned
- WHT certificate issued by bank (Zakat/Tax statement)
- Bank statements (if no certificate available)
Where to See Bank Profit Amount?
1. Ask your bank for:
- Annual Withholding Certificate
- Income Tax Certificate for Tax Year 2025
2. Log in to your internet banking and check:
- Tax deducted certificate
- Profit earned summary
Common Questions
Can I split profit between final and normal tax sections?
No, if your total annual profit exceeds Rs. 5 million, you must declare full amount under NTR.
I am a filer but my profit is just Rs. 200,000. Do I need to declare it?
Yes, declare it under Final Tax. But no additional tax will be payable.
I am a senior citizen / widow. Is there any exemption?
Some savings schemes (like Behbood) have lower or exempt rates, but still must be declared in Final Tax section if WHT was applied.
See this video guide to learn more about declaring profit on debt in tax return 2025:
Conclusion
The 2025 update by FBR clarifies that bank profit exceeding Rs. 5 million is not subject to fixed 15% tax, but must be declared under Normal Tax Regime. If you ignore this, your return may be flagged for audit or non-compliance.
Always check your bank’s tax certificate, declare all sources of profit accurately, and adjust WHT carefully to avoid under/over payment.
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