Lahore 28°C
Islamabad 24°C
Tax on certain payments by life insurance business
(1) For tax year, 2026 and onwards, a tax shall be imposed, at the rate specified in Division IC of Part III of the First Schedule on every individual who receives any payout, benefit, surrender value, maturity proceeds or similar payment (hereinafter referred to as payout) from a life insurance business on account of insurance policy, family takaful certificate, plan or any similar arrangement.
(2) For the purposes of sub-section (1), the amount liable to tax shall be the gross amount of payout reduced by aggregate amount of premiums or contributions paid by the policy holder or participant.
(3) The provisions of sub-section (1) shall not apply where the payout or benefit is made:—
(a) on account of death of the insured or participant;
(b) on account of disability of the insured or participant; or (c) after completion of four years from the date of issuance of the policy, certificate or plan.
(4) Tax deducted under this section shall be treated as final tax on the income arising from such payout or benefit.
(2) For the purposes of sub-section (1), the amount liable to tax shall be the gross amount of payout reduced by aggregate amount of premiums or contributions paid by the policy holder or participant.
(3) The provisions of sub-section (1) shall not apply where the payout or benefit is made:—
(a) on account of death of the insured or participant;
(b) on account of disability of the insured or participant; or (c) after completion of four years from the date of issuance of the policy, certificate or plan.
(4) Tax deducted under this section shall be treated as final tax on the income arising from such payout or benefit.
Amendment history (6)
- Section 7G inserted by the Finance Act, 2026.
- The expression “5, 6 and 7” substituted by the Finance Act, 2021.
- The expression “5, 5AA, 6, 7, 7A and 7B” substituted by the Finance Act, 2022.
- The expression “5, 5AA, 6,” substituted by the Finance Act, 2025.
- The expression “7E” substituted by the Finance Act, 2026.
- The expression ”5, [ ] [ ] [“, 5AA”] 6, 7, 7A [and 7B]”” substituted by the Finance Act, 2022.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
Source FBR PDF page 45
Unofficial reference, compiled from the FBR’s consolidated Income Tax Ordinance 2001 (amended up to 30 June 2026). Provided for general information only — not an official FBR publication and not legal or tax advice. Always verify against the official FBR text before relying on it for filing or any decision.