Maximum 5% Tax – No Withholding – Full Benefits
By Khalid Iqbal | Dawars Associates – Tax & Corporate Advisory Firm, Islamabad
⚖️ Background
Senior citizens, pensioners, and families of shuhada (martyrs) often invest in Bahbood Saving Certificates, Pensioner Saving Certificates, and Shuhada Family Welfare Accounts for safe and regular income.
But do you know the tax rules governing these investments? Many people pay more tax than required or don’t claim exemptions properly. Here’s what the law says and how you can save.
💡 What the Law Says – Income Tax Ordinance, 2001
📌 Part III – Reduction in Tax Liability
Tax payable under Clause (c) of subsection (1) of section 39 on profit/yield from Bahbood, Pensioner, or Shuhada Family Welfare Account shall not exceed 5% of such profit.
✅ Meaning: Your tax is capped at 5%, even if your other income is taxed at a higher rate.
🚫 Exempt from Specific Provisions – Part IV Relief
You also enjoy full exemption from the following tax provisions:
🛑 Clause 36A – Section 151 Not Applicable
No withholding tax (WHT) will be deducted on profit payments from these accounts.
🛑 Clause 103 – Section 7B Not Applicable
You are not subject to fixed tax on profit on debt under Section 7B.
🔍 Example for Clarity
| Investment Type | Profit Earned | Tax Deducted | Actual Tax Liability |
| Bahbood Certificates | Rs. 100,000 | 0 | Rs. 5,000 max (5%) |
| Pensioner Certificates | Rs. 200,000 | 0 | Rs. 10,000 max (5%) |
✅ No WHT deduction and flat 5% tax payable only when filing return.
📢 Why It Matters
If you or your family are relying on these saving schemes:
✔️ You must ensure no tax is deducted at source.
✔️ While filing return, limit tax liability to 5% only.
✔️ Don’t apply Section 7B’s fixed tax – it’s not allowed.
✅ What You Should Do
At Dawars Associates, we advise you to:
- Verify your bank/National Savings does not deduct WHT.
- While filing your tax return, apply the 5% maximum tax limit.
- Avoid overpayment by claiming this relief correctly.
- Consult us for accurate tax filing and exemption claims.
💬 Dawars Associates Can Help
We specialize in tax filing for senior citizens, families of shuhada, and retired professionals. Our team ensures:
✔️ Proper claim of tax benefits under law
✔️ No excess tax payment or deduction
✔️ Hassle-free compliance with FBR rules
📩 Contact us today to protect your savings and maximize your tax benefits.
📍 Dawars Associates – Trusted Tax & Corporate Advisors
📧 info@dawarsassociates.com
🌐 www.dawarsassociates.com
📞 0333-5191977
📍 Islamabad, Pakistan
