Federal Board of Revenue (FBR) issued an instruction to the banks regarding the withholding of tax on profit on debt unless overseas Pakistanis produce an exemption certificate under section 159 of the income tax ordinance.

According to the details the income tax circular stated that section 159 of the income tax ordinance requires withholding agents to deduct the full amount of tax in case of the taxpayer does not produce tax exemption certificate under section 159(1) of income tax ordinance.

However, in order to incentivize remittance from the overseas Pakistanis, profit on debt for a rupee account which is scheduled bank in Pakistan is exempt from tax to the extent of the deposit that has been made exclusively from the foreign exchange.