Keeping in view the hardships faced by the widows and senior citizens, Bahbood Savings Certificates (BSCs) with a 10-years maturity period were launched by the Government of Pakistan on July 30, 2003. Initially, BSC was meant for widows only; however, it was decided later by the Government to extend the facility to senior citizen aged 60 years and above with effect from January 1, 2004.

BSC is available in the denominations of:

Rs.5, 000/-, Rs. 10,000/-, Rs. 50,000/-, Rs. 100,000/-, Rs. 500,000/- Rs. 1,000,000/-.

Profit is paid on monthly basis started from the date of purchase of the certificates.

According to Income Tax law, no tax at the time of profit payment is deducted i.e. full profit is paid to the investor, however applicable tax is to be paid at the time of Income Tax Return filing.

Under Income Tax Law profit / Interest / yield are taxed according to following slabs.

S.No Profit on Debt Rate of Tax
1. Up to Rs. 25,000,000 10%
2. Rs. 25,000,001 to Rs. 50,000,000 Rs. 2,500,000 + 12.% of the amount exceeding Rs. 25,000,000
3. Rs. 50,000,001 and above Rs. 5,625,000+15% of the amount exceeding Rs. 50,000,000

However to relax overburden of high taxes, income from Bahbood Certificates is taxed at 10% irrespective of above slabs.

In order to restrict tax rate at 10% Income from Bahbood needs to be declared properly in the return of income so as to avoid any possible error or over/under payment of taxes.

You may contact us for further details or filing of Income Tax Returns.