The Federal Board of Revenue (FBR) has said that interest income earned from investment in the federal government securities will be taxed at the rate of 15 percent under the Final Tax Regime (FTR) with effect from July 01, 2021. In an explanation to the Finance Act, 2021, the FBR said that interest income earned by all taxpayers except banking and insurance companies from investment in federal government securities shall be taxed at the rate of 15 percent under the final tax regime. This has been provided in clause (20) of Part III of the Second Schedule on the Income Tax Ordinance, 2001. The FBR said that the scope of separate block taxation on interest income has been reduced. Previously, interest income up to Rs36 million in case of individuals and Association of Persons (AOPs) was chargeable to tax at the rates ranging from 15 percent to 20 percent under final tax regime. By virtue of new amendments; the interest income up to Rs5 million shall be taxed at the rate of 15 percent under final tax regime. If the interest income is more than Rs5 million, it shall be taxed under normal tax regime. Uniform rate of withholding tax under section 151 of the ordinance on interest income has been introduced at 15 percent.