The Federal Board of Revenue (FBR) is considering a 2% increase in the tax rate on interest income earned from commercial bank deposits and savings schemes in the forthcoming 2025–26 federal budget to mitigate potential revenue losses stemming from proposed tax relief measures for the salaried class and other sectors.
The proposed increase would apply to both tax filers and non-filers.
The move comes amid pressure from the International Monetary Fund (IMF), which has urged the government to present a comprehensive set of tax measures to close the expected revenue gap.
This shortfall has arisen due to declining formal sector activity, following steep tax hikes introduced in the 2024–25 budget under the IMF-supported fiscal program.
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“One of the options under review is raising tax rates on passive income, as both individuals and corporations commonly invest in commercial banks and saving schemes,” a senior government official told The News on Sunday.
Currently, interest income is taxed at 15% for filers, while non-filers are subject to a significantly higher rate of 35%. The proposed adjustment would raise these rates to 17% and 37%, respectively.
The official noted that the IMF has yet to grant final approval for the measure, which remains under active consideration as part of the broader revenue strategy for the upcoming budget.
