Behbood Saving Certificates (BSCs) are a popular government-issued investment tool in Pakistan, especially designed for senior citizens, widows, and pensioners. While they provide monthly profit payouts, many investors are unaware of how these profits are taxed.
A common misconception is that profits from BSCs are fully tax-exempt because the government doesn’t deduct tax at the time of profit distribution. However, the reality is more complex.
In this article, we’ll explain how BSC profits are taxed, how to report them to the FBR via IRIS, and how the 5% tax rate and government rebate work in your favor.
What Makes Behbood Saving Certificates Different?
Unlike profits from bank savings or term deposits, where tax is deducted at source, Behbood Certificate holders receive their full monthly profit without any deduction. But this doesn't mean the income is tax-free.
👉 Key Point: The tax is self-assessed and paid at the time of filing your annual tax return with the Federal Board of Revenue (FBR).
How to Calculate Tax on Behbood Certificate Profits
o determine if you owe tax on your Behbood profits, follow this method:
Step 1: Calculate Your Annual Profit
- Multiply your monthly profit by 12 to get the total annual income from BSCs.
Step 2: Check Against the PKR 600,000 Exemption Limit
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If your total annual profit is PKR 600,000 or less → No tax is payable.
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If your profit exceeds PKR 600,000, the entire amount becomes taxable at a flat rate of 5% not just the amount over the threshold.
Examples for Clarity
| Annual Profit | Tax Payable | Explanation |
|---|---|---|
| PKR 500,000 | 0 | Under the threshold |
| PKR 1,000,000 | PKR 50,000 | 5% of full amount |
| PKR 2,000,000 | PKR 100,000 | Still 5% flat tax |
How to Report Behbood Profits on FBR’s IRIS System
if your annual profit exceeds PKR 600,000, you must report it in your income tax return on the FBR IRIS portal.
Here’s how:
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Login to the IRIS portal and open your tax return.
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Go to the "Other Source" section.
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Click on "Receipts & Deductions".
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Look for “Yield on Behbood Certificate / Pensioner Benefit Account”.
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Enter the annual profit amount.
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Click “Calculate” — the system will apply 0% tax if income is under PKR 600,000, or 5% tax if it’s over.
Government Rebate for Behbood Certificate Holders
One of the key benefits of investing in Behbood Certificates is the special tax rebate offered by the government.
Why Is There a Rebate?
To support pensioners and senior citizens, the government ensures Behbood income is taxed at a much lower rate than regular income from salary or business.
| Income Type | Profit | Tax Payable | Notes |
|---|---|---|---|
| Salary/Business | PKR 1,000,000 | PKR 60,000 (approx.) | Slab rate applies |
| Behbood | PKR 1,000,000 | PKR 50,000 | Flat 5% tax |
In this case, the rebate is PKR 10,000 — automatically applied by the system under "Tax Reduction".
Even for higher profits (e.g., PKR 2,000,000), Behbood holders benefit from tax savings of over PKR 150,000, compared to normal income tax slabs.
Other Key Points to Remember
- No Tax Deducted at Source: You receive your full profit every month.
- You Must File a Tax Return: If annual BSC income exceeds PKR 600,000, filing is mandatory.
- Flat 5% Tax Rate: Applies to the entire amount if it crosses the exemption threshold.
- Government Incentive: The lower tax rate promotes senior citizens' financial stability.
- Adjustments Allowed: You can subtract advance tax paid (like on electricity bills) to reduce your final tax payable.
Conclusion: Be Informed and Stay Compliant
Behbood Saving Certificates are a safe, rewarding investment, especially for senior citizens. But it’s crucial to understand that tax is payable if your annual profit exceeds PKR 600,000 — even if no tax is deducted monthly.
The 5% flat tax rate is generous compared to regular income tax rates, and the system is designed to support you with rebates and reduced liability.
✅ If you hold BSCs and earn over PKR 600,000 annually:
→ File your return through FBR IRIS
→ Report your income accurately
→ Pay the 5% tax (if applicable)
→ Enjoy peace of mind with full compliance
Note: Need help? Book your appointment now — I’ll personally handle your case with full professionalism and care. Virtual support available. Don’t worry, you’re in safe hands!