Section 151.Profit on debt - ITO, read with Rule 81B(5) & Rule 81B(6), Income Tax Rules, 2002
Joint Account & Tax on Profit on Debt - Pakistan
Under Section 151 of the Income Tax Ordinance, 2001, tax is deducted at source on profit on debt at the following rates:
- Filer: 20%
- Non-Filer: 40%
Joint Bank Accounts — Legal Position
As per Rule 81B(5) and Rule 81B(6) of the Income Tax Rules, 2002:
For joint bank accounts, the Active Taxpayers List (ATL) status is determined collectively. If any one joint account holder appears on the ATL, the joint account is treated as ATL-compliant for withholding purposes.
Correct Tax Deduction: Where at least one joint account holder is a filer:
- Tax is deducted at the filer rate (20%)
- The non-filer rate (40%) is not applicable at the withholding stage
Example
As per Rule 81B(5) and Rule 81B(6) of the Income Tax Rules, 2002 : One joint holder is an active filer
Tax deducted by Bank:
Profit on debt: Pkr 100,000
100,000 * 20% = 20,000 (The tax deducted by bank will be deposited into government treasury)
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