What is the maximum tax on Behbood Savings Certificate profit?

Clause (6) of Part III of the Second Schedule says the tax payable on this profit shall not exceed 5% of such profit. The cap was 10% until the Finance Act, 2022 substituted 5%.

Is tax deducted from Behbood profit when it is paid?

Clause (36A) of Part IV of the Second Schedule says clause (a) of section 151(1), the withholding rule for National Savings yield, shall not apply to Bahbood Savings Certificate or Pensioner's Benefit Account profit. The Ordinance instead taxes the profit at Division I rates through clause (103), capped at 5%.

Who is allowed to invest in Behbood or the Pensioners' Benefit Account?

The Income Tax Ordinance does not say. Eligibility for these National Savings products is set by rules that are not part of this corpus, so this page does not describe it.

Pensioners and senior citizensLaw current to 30 June 2026

What tax is charged on Behbood Savings Certificate and Pensioners' Benefit Account profit?

Short answer

Clause (6) of Part III of the Second Schedule caps the tax on Bahbood Savings Certificate, Pensioners Benefit Account and Shuhada Family Welfare Account profit at 5% of that profit. Clause (103) of Part IV taxes Behbood and Pensioners' Benefit Account profit at ordinary Division I rates within that cap, and clause (36A) disapplies section 151(1)(a) withholding.

Applies to: Individuals who hold Bahbood Savings Certificates, a Pensioners' Benefit Account or a Shuhada Family Welfare Account, for tax year 2027.

What does the law say?

Three clauses of the Second Schedule to the Income Tax Ordinance, 2001 set the treatment of these products, and they override the rules that normally apply to National Savings profit.

The normal rule. Profit on debt is income under section 39(1)(c). For an individual, section 7B imposes a separate tax on “the gross amount of the profit on debt” at the Division IIIA rate, and section 151(1)(a) makes the payer deduct tax where “a person pays yield on an account, deposit or a certificate under the National Savings Scheme or Post Office Savings Account”.

The special rule. For Behbood and Pensioners’ Benefit Account profit, three clauses change that:

Clause	What it says	Products covered
Part III, clause (6)	Tax payable under section 39(1)(c) on the profit “shall not exceed 5% of such profit”	Bahbood Savings Certificate, Pensioners Benefit Account, Shuhada Family Welfare Account
Part IV, clause (36A)	Section 151(1)(a) “shall not apply” to the profit	Bahbood Savings Certificate, Pensioner’s Benefit Account, Shuhada Family Welfare Account
Part IV, clause (103)	Section 7B “shall not apply”, provided tax is “paid at the rates specified in Division I of Part I of the First Schedule subject to clause (6) of Part III”	Bahbood Savings Certificate, Pensioner’s Benefit Account

Put together: the profit is taken out of the flat section 7B charge, taxed at the normal slab rates in Division I, and the tax on it can never be more than 5% of the profit.

The 5% figure was 10% until the Finance Act, 2022 substituted it. The Shuhada Family Welfare Account was added to clause (6) and clause (36A) by the Finance Act, 2018.

How does it work in practice?

You work out the tax under Division I as for any other income, then compare it with 5% of the profit. The lower figure is the most you pay on that profit.

For an individual who is not a salaried individual, clause (1) of Division I sets the tax year 2027 rates (1 July 2026 to 30 June 2027):

Taxable income	Rate of tax
Up to Rs. 600,000	0%
Rs. 600,000 to Rs. 1,200,000	15% of the amount exceeding Rs. 600,000
Rs. 1,200,000 to Rs. 1,600,000	Rs. 90,000 + 20% of the amount exceeding Rs. 1,200,000
Rs. 1,600,000 to Rs. 3,200,000	Rs. 170,000 + 30% of the amount exceeding Rs. 1,600,000
Rs. 3,200,000 to Rs. 5,600,000	Rs. 650,000 + 40% of the amount exceeding Rs. 3,200,000
Above Rs. 5,600,000	Rs. 1,610,000 + 45% of the amount exceeding Rs. 5,600,000

Because clause (36A) disapplies section 151(1)(a), the Ordinance does not require the payer to withhold tax from this profit under that section. The tax is settled through your own tax position for the year.

Worked example (illustrative figures)

Rukhsana, a widow in Rawalpindi, has no salary, business or other income. Her only income for tax year 2027 is profit on Bahbood Savings Certificates.

Case A: profit of Rs. 840,000 (Rs. 70,000 a month).

Division I, clause (1): 15% x (Rs. 840,000 - Rs. 600,000) = 15% x Rs. 240,000 = Rs. 36,000.
Clause (6) cap: 5% x Rs. 840,000 = Rs. 42,000.
The Division I figure is lower, so the tax is Rs. 36,000.

Case B: profit of Rs. 1,440,000 (Rs. 120,000 a month).

Division I, clause (1): Rs. 90,000 + 20% x (Rs. 1,440,000 - Rs. 1,200,000) = Rs. 90,000 + Rs. 48,000 = Rs. 138,000.
Clause (6) cap: 5% x Rs. 1,440,000 = Rs. 72,000.
The tax “shall not exceed” the cap, so the tax is Rs. 72,000.

Case C: profit of Rs. 540,000. This is within the 0% band of Division I, so the tax is Rs. 0.

What if I hold a Shuhada Family Welfare Account?

The 5% cap in clause (6) and the withholding exclusion in clause (36A) both name the Shuhada Family Welfare Account. Clause (103), which removes section 7B and applies Division I rates, names only the Bahbood Savings Certificate and the Pensioner’s Benefit Account. The text does not explain how section 7B and the 5% cap fit together for Shuhada Family Welfare Account profit, and this page does not resolve it.

What if I also have other income?

The Behbood profit is added to your taxable income for Division I, so other income can push it into a higher band. The 5% ceiling still limits the tax “in respect of” the profit, but the Ordinance does not set out a method for splitting one Division I figure between the profit and your other income. The companion page on whether this tax is final covers the return side.

Common mistakes

Assuming the ordinary National Savings rules apply. Clauses (36A) and (103) take this profit out of section 151(1)(a) and section 7B.
Paying 5% on every rupee of profit. The 5% is a ceiling. If the Division I tax is lower, as in Case A, the lower figure applies.
Using the old 10% cap. It was replaced by 5% from the Finance Act, 2022.
Treating the cap as an age concession. It attaches to the product, whoever the holder is.

What to check in the official text

Read clause (6) of Part III and clauses (36A) and (103) of Part IV of the Second Schedule, sections 7B, 39(1)(c) and 151(1)(a), and clause (1) of Division I in Part I of the First Schedule in the official PDF, since our site copy does not reproduce the rate tables. Who may open these accounts, and the profit rates they pay, are set outside the Income Tax Ordinance and are not covered here.

Where this comes from in the law

Income Tax Ordinance, 2001, Second Schedule, Part III, clause (6)
The tax payable under clause (c) of sub-section (1) of section 39, in respect of any amount paid as yield or profit on investment in Bahbood Savings Certificate or Pensioners Benefit Account
As amended to 2026-06-30. Download official PDF
Income Tax Ordinance, 2001, Second Schedule, Part IV, clauses (36A) and (103)
The provisions of clause (a) of sub-section (1) of section 151 shall not apply in respect of any amount paid as yield or profit on investment in Bahbood Savings Certificate or Pensioner’s Benefit Account
As amended to 2026-06-30. Download official PDF
Income Tax Ordinance, 2001, section 151 (Profit on debt)
a person pays yield on an account, deposit or a certificate under the National Savings Scheme or Post Office Savings Account;
As amended to 2026-06-30. Download official PDF
Income Tax Ordinance, 2001, section 7B (Tax on profit on debt)
a tax shall be imposed, at the rate specified in Division IIIA of Part I of the First Schedule, on every person, other than a company, who receives a profit on debt
As amended to 2026-06-30. Download official PDF
Income Tax Ordinance, 2001, section 39 (Income from other sources)
profit on debt;
As amended to 2026-06-30. Download official PDF
Income Tax Ordinance, 2001, First Schedule, Part I, Division I, clause (1) (rate table)
As amended to 2026-06-30. Download official PDF