Zakat is deducted once a year, on the first day of Ramadan, at a flat 2.5% of the balance in eligible savings-type accounts that meet or exceed the Nisab threshold on that date — filing a CZ-50 exempts you from this automatic deduction. Withholding tax is separate and ongoing: profit earned on your Allied Bank deposits is taxed at 20% (filers) or 40% (non-filers) under current rates, and cash withdrawals above Rs 50,000/day are taxed at 0.8% for non-filers only.
These are two entirely different deductions that often get confused because both show up as reductions in a bank statement. Zakat is a religious obligation collected under the Zakat & Ushr Ordinance 1980, deducted once a year on a single date. Withholding tax is a government tax collected under the Income Tax Ordinance 2001, deducted continuously — on profit as it's earned and on large cash withdrawals as they happen.
Zakat Deduction Estimator
Check whether your balance will trigger a deduction this Ramadan, and how much — based on the notified Nisab threshold and your account balance on that date.
Uses the 2.5% statutory rate under the Zakat & Ushr Ordinance 1980 and the Rs 503,529 Nisab figure notified for 1447 A.H. (2026) — this figure is subject to the government's official annual confirmation; verify with your branch before Ramadan. This estimator checks your balance against the threshold on a single date, exactly as Allied Bank's own deduction process does, but the actual notified deduction date and final threshold can shift slightly year to year.
Zakat Deduction
Allied Bank deducts Zakat automatically from eligible accounts on the first day of Ramadan, as notified each year by the Government of Pakistan, and transfers the full amount directly to the Central Zakat Account maintained at the State Bank of Pakistan — the bank does not retain any of it.
What Gets Checked
Your account balance on that single notified date — not your average balance, not last week's balance. A balance that dips below Nisab on deduction day triggers no deduction that year, even if it was higher before or after.
What's Deducted
2.5% of the full eligible balance — not just the amount above the Nisab threshold. This is the statutory rate under the Zakat & Ushr Ordinance 1980, and it applies to both conventional and Islamic savings-type accounts.
What's Exempt
Current accounts are automatically exempt and don't need a CZ-50. Accounts with a valid, on-file exemption declaration are also skipped.
The Nisab threshold is based on the value of 52.5 tolas of silver and is recalculated every year — it jumped roughly 180% between 2025 and 2026 (from approximately Rs 179,689 to Rs 503,529) purely because of silver price movements, not a policy change. *This 2026 figure is subject to the government's official annual confirmation; verify the current year's exact figure with your branch before Ramadan.
Source: Allied Bank's official article "Zakat on Bank Deposits in Pakistan," and the Ministry of Poverty Alleviation & Social Safety's Nisab notification for 1447 A.H.
Claiming a Zakat Exemption (CZ-50)
If your fiqh doesn't recognize automatic bank deduction as fulfilling your Zakat obligation, or you'd rather calculate and pay it yourself, you can opt out of the bank's deduction by filing a Zakat Declaration Form (CZ-50).
Original Only
Only the original CZ-50, or a true copy duly attested by a Notary Public, is accepted. Photocopies are rejected outright.
Submit Early
The form must reach your branch at least 30 days before the expected deduction date — confirm the exact cutoff with your branch each year, since the deduction date itself moves with the moon sighting.
It's a Legal Document
CZ-50 is submitted under the Zakat & Ushr Ordinance 1980. Submitting a false declaration carries legal consequences — this isn't a form to file lightly if you're uncertain whether an exemption genuinely applies to your situation.
Filing a CZ-50 removes the bank's automatic deduction only — it does not remove your underlying religious obligation to pay Zakat, which you'd then need to calculate and pay independently. If Zakat was deducted in error (from an exempt account type, after a valid CZ-50 was already on file, or from a non-Muslim account holder), contact your branch immediately for a correction.
Source: Allied Bank's official Zakat guidance and CZ-50 declaration process.
Withholding Tax on Bank Profit
Profit earned on savings accounts, term deposits, and similar instruments is taxable under Section 151 of the Income Tax Ordinance 2001. For Tax Year 2026-27 (1 July 2026 – 30 June 2027), the rate specifically for bank deposits was increased under the Finance Act 2026.
| Deposit Category | Active Filer | Non-Filer |
|---|---|---|
| Bank deposit / financial institution profit | 20% | 40% |
| National Savings Scheme / Post Office | 15% | 30% |
The 20%/40% bank-deposit rate is a genuine increase from the 15%/30% that applied in Tax Year 2025-26 — several older guides still circulating online cite the old rate, so double-check which tax year a source is describing. This applies equally to Islamic banking profit; there's no exemption from withholding tax simply because a deposit is Shariah-compliant rather than conventional. This is typically a final tax for individual depositors, deducted automatically before the profit is credited to your account, and is separate from — and unrelated to — the Zakat deduction described above.
Source: FBR withholding tax rate card, Tax Year 2026-27, as amended by the Finance Act 2026 (Section 151).
Withholding Tax on Cash Withdrawal
| Filer Status | Threshold | Rate |
|---|---|---|
| Active Filer (on FBR's Active Taxpayer List) | Any amount | 0% — no tax |
| Non-Filer | Above Rs 50,000 in a single day, across all accounts combined | 0.8% of the amount withdrawn |
This tax, under Section 231AB, applies to cumulative cash withdrawals across all your accounts at a bank in a single day — not per transaction and not per account. Filers on the Active Taxpayer List (ATL) pay nothing regardless of how much they withdraw; the entire mechanism exists as an incentive to file. Both this tax and the withholding tax on profit are adjustable — they can be claimed as credit against your final tax liability when you file your annual income tax return.
Source: FBR withholding tax rate card, Tax Year 2026-27, as amended by the Finance Act 2026 (Section 231AB).
Getting Your Tax Certificates
To file your annual return, you'll need a profit certificate showing gross profit earned and withholding tax deducted during the tax year. You can typically download an Annual Tax Deduction Statement through myABL under Statements or Documents, or request one at your branch with your CNIC — the Withholding Tax Certificate itself carries no charge under Allied Bank's Schedule of Charges.
Good For
- Knowing whether your balance will trigger a Zakat deduction this Ramadan
- Understanding the CZ-50 process and its 30-day deadline before you miss it
- Checking the current bank-profit withholding tax rate rather than an outdated one
- Understanding how much extra a non-filer status actually costs on withdrawals