The Government of Pakistan, through the Central Directorate of National Savings (CDNS), has issued a notification (F. No. 131(1)(Rules)/PD/2024-25 dated June 30, 2025) revising the Withholding Tax (WHT) rates applicable to profits on debt and prize bond winnings under the National Savings Schemes (NSS). These changes will be effective from July 1, 2025, in line with the Tenth Schedule of the Income Tax Ordinance, 2001, as amended by the Finance Act, 2024.
The revision mainly distinguishes the rates for individuals on the Active Taxpayers List (ATL) versus those who are not. This initiative aims to encourage tax compliance and increase the number of registered taxpayers in the country. Here are the revised tax rates on profit on debt and prize bonds winnings in 2025.
Legal Basis
The changes are grounded in the following legal framework:
- Income Tax Ordinance, 2001 (ITO 2001)
- Finance Act, 2024
- Tenth Schedule of the ITO 2001
- Sections 151 and 156 of the ITO 2001
The relevant sections state:
- Section 151: Deals with withholding tax on “Profit on Debt”.
- Section 156: Deals with withholding tax on “Prizes and Winnings”.
Revised Withholding Tax Rates (Effective July 1, 2025)
| S. No. | Section | Description | Persons Appearing in ATL | Persons Not Appearing in ATL |
|---|---|---|---|---|
| 1 | Section 151 | Profit on Debt | 15% | 30% |
| 2 | Section 156 | Prizes and Winnings | 15% | 30% |
Note: These rates are final tax for individuals and apply at the source, meaning the tax will be deducted before payment is made to the investor or prize winner.
Who is on the Active Taxpayers List (ATL)?
The Active Taxpayers List (ATL) is a public list published by the Federal Board of Revenue (FBR) of those individuals and entities who have filed their income tax returns for the latest tax year.
Benefits of being on the ATL include:
- Reduced withholding tax rates (as shown above)
- Eligibility for various financial and legal incentives
- Enhanced credibility in financial transactions
Key Implications for Investors and Prize Winners
Double Tax for Non-Filers:
Individuals not on the ATL will face double the WHT (30%) compared to filers (15%). This directly impacts profits earned from:
- Defense Saving Certificates
- Behbood Saving Certificates
- Regular Income Certificates
- Prize Bonds and all other profit-bearing NSS products
Auto Dedication at Source:
The tax is deducted by the National Savings Centers (NSCs) or banks at the time of profit payment or prize disbursement.
No Further Tax Filing Required (For Most Cases):
Since the tax is treated as final, individuals generally don’t need to pay additional tax on these incomes. However, these incomes must still be declared on the return.
Penalty for Non-Compliance:
The high rate for non-ATL individuals acts as a financial penalty and incentive to file returns regularly.
Steps to Get on the ATL
If you’re not currently on the Active Taxpayers List, here’s how to get listed:
- Register for an NTN (National Tax Number)
- File your Income Tax Return through Iris (FBR’s online portal)
- Ensure timely submission before the annual deadline
- Pay any outstanding taxes, if applicable
Once filed, your name will be automatically added to the ATL — usually updated every 24 hours.
Conclusion
This revision in the Withholding Tax policy on National Savings Schemes and Prize Winnings is a significant measure by the Government of Pakistan to increase tax compliance. Individuals earning profit on debt or winning prize bonds must ensure they appear on the Active Taxpayers List to avoid excessive taxation.
By maintaining your ATL status, you not only contribute to national revenue but also save a substantial amount of money in taxes.
Frequently Asked Questions (FAQs)
Q1: What is the ATL, and why is it important?
Ans: The ATL is a list of people who have filed their tax returns. It allows you to benefit from lower tax rates and avoid penalties.
Q2: What happens if I am not on the ATL?
Ans: You will be charged a 30% WHT instead of 15%, effectively reducing your profits.
Q3: How often is ATL updated?
Ans: The ATL is updated every 24 hours by the FBR.
Q4: Do these taxes apply to all investments?
Ans: No, these apply specifically to profit-bearing instruments and prize winnings under the National Savings Schemes.
Q5: Can I claim a refund on this tax?
Ans: In most cases, the tax is treated as final, and refund claims may not be allowed. However, consult with a tax advisor for your specific case.
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