Is profit on T-bills, PIBs and Sukuk taxable for individuals?

Profit on treasury bills, Pakistan Investment Bonds and sukuk is taxable income for an individual in Pakistan, and in most cases the tax is taken before the money reaches you. The rates below come from the Income Tax Ordinance, 2001 as amended to 30 June 2026, so they apply to profit received in tax year 2027 (1 July 2026 to 30 June 2027).

What does the law say about T-bills and PIBs?

Section 151(1)(c) covers the case where “the Federal Government, a Provincial Government or a Local Government” pays profit on a security it has issued. The payer must deduct tax from the gross profit at the rate in Division IA of Part III of the First Schedule. That Division reads:

Clause	Payment	Rate
(a)	Profit paid by a banking company or financial institution on an account or deposit	20%
(b)	Profit on Government securities under section 151(1)(c) paid to any person other than an individual	20%
(c)	All other cases	15%

An individual holding T-bills or PIBs is outside clause (b), so the deduction is 15%. The Ordinance’s definition of profit on a debt includes any “profit, yield, interest, discount, premium”, so the discount you earn on a T-bill counts as profit even though no coupon is paid.

Section 151(1) also says the deduction is made on the gross profit “as reduced by the amount of Zakat, if any, paid by the recipient” under the Zakat and Ushr Ordinance, 1980.

Is the 15% the final tax?

Section 7B charges every person other than a company who receives profit on debt from a payer listed in section 151(1)(a) to (d), at the rate in Division IIIA of Part I. That Division repeats the same three clauses, so an individual’s rate on Government securities is again 15%. Section 8 makes a section 7B tax “a final tax”: the profit is kept out of your other income, and no expense or loss is set against it.

Section 7B(3)(b) switches the section off for profit on debt that “exceeds five million Rupees”. In that case section 151(3) makes the tax deducted a minimum tax rather than a final one. The section does not say whether the Rs. 5 million is measured per payment or across the year, and this page does not settle that point.

How is a sukuk return taxed?

Sukuk are taxed separately. Section 151(1A) requires “every special purpose vehicle or a company” paying a return on sukuk to deduct tax at the rate in Division IB of Part III. Section 5AA charges the holder at Division IIIB of Part I, and section 8 makes that tax final. The rates are:

Sukuk holder	Rate
Company	25%
Individual or AOP, return more than one million	12.5%
Individual or AOP, return less than one million	10%

Two gaps are worth knowing. The Division does not say which rate applies to a return of exactly one million. And the heading of Division IIIB refers only to returns “received from a special purpose vehicle”, while section 5AA covers a special purpose vehicle “or a company”.

What about a gain when I sell before maturity?

Section 151A, inserted by the Finance Act, 2025, applies when a debt security, “including government securities”, is disposed of. The custodian, which includes a bank maintaining your Investor Portfolio Securities (IPS) account, must deduct tax at the Division IIIAA rate on the gross capital gain. The Finance Act, 2026 raised that rate from 15% to 20%. The gain is consideration received minus cost of acquisition. The section does not apply to a disposal made through a registered stock exchange and settled through NCCPL. Section 151A does not itself say whether this deduction is final or adjustable.

Worked example (illustrative figures)

Farhan, a school teacher in Rawalpindi on the active taxpayers’ list, has these investments in tax year 2027:

1. T-bill discount. He buys 12-month T-bills with a face value of Rs. 2,000,000 for Rs. 1,780,000.

• Profit (discount): Rs. 2,000,000 - Rs. 1,780,000 = Rs. 220,000
• Tax at 15%: Rs. 220,000 x 15% = Rs. 33,000

2. PIB coupon. He receives Rs. 150,000 of profit on PIBs.

• Tax at 15%: Rs. 150,000 x 15% = Rs. 22,500

3. Sukuk return from a company. He receives Rs. 600,000, which is less than one million.

• Tax at 10%: Rs. 600,000 x 10% = Rs. 60,000

4. Early sale of a PIB through his bank’s IPS account. Cost Rs. 1,000,000, sale proceeds Rs. 1,080,000.

• Gain: Rs. 1,080,000 - Rs. 1,000,000 = Rs. 80,000
• Deduction at 20%: Rs. 80,000 x 20% = Rs. 16,000

Total tax taken at source: Rs. 33,000 + Rs. 22,500 + Rs. 60,000 + Rs. 16,000 = Rs. 131,500.

What if I am not on the active taxpayers’ list?

Rule 1 of the Tenth Schedule increases any deduction rate “by hundred percent of the rate specified” in the Ordinance for a person not appearing in the active taxpayers’ list. On Farhan’s figures, the T-bill deduction would become 30% (Rs. 66,000) and the sukuk deduction 20% (Rs. 120,000). How the excess over the normal rate is treated is covered on the non-filer pages linked below.

Common mistakes

• Applying 20% to an individual’s T-bill profit. Clause (b) of Division IA limits 20% to persons other than individuals.
• Treating the T-bill discount as a capital gain. The definition of profit on a debt includes discount, so it is taxed under section 151.
• Assuming sukuk follow the T-bill rate. Sukuk returns have their own rates under Division IB.
• Forgetting the disposal tax. Section 151A applies to government securities sold through a custodian before maturity.

What to check in the official text

Read sections 151, 151A, 5AA, 7B and 8, and Divisions IA, IB and IIIAA of Part III and Divisions IIIA and IIIB of Part I of the First Schedule in the official PDF. Check whether your sukuk return is paid by a special purpose vehicle or a company, and whether your disposal is settled through NCCPL, since both decide which provision applies.