Withholding Tax Slab

7/29/2019 Withholding Tax Slab

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CollectionAnd

DeductionOf Tax at Source

(Taxpayers Facilitation Guide)

Prepared by:

FATE Wing

October, 2008

Revenue DivisionFederal Board of Revenue

Government of Pakistan

[email protected], 051-111-227-227www.fbr.gov.pk
mailto:[email protected]://www.fbr.gov.pk/http://www.fbr.gov.pk/mailto:[email protected]


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Our VisionTo be a modern, progressive, effective, autonomousand credible organization for optimizing revenue byproviding quality service and promoting compliance

with tax and related laws

Our MissionEnhance the capability of the tax system to collect

due taxes through application of modern techniques,providing taxpayer assistance and by creating amotivated, satisfied, dedicated and professional

workforceOur Values

IntegrityProfessionalism

TeamworkCourtesyFairness

TransparencyResponsiveness

For assistance and information on tax mattersPlease contact our help line center through

Toll Free Telephone 0800-00-227

Telephone 051-111-227-227 or 051-111-227-228Fax 051-9205593

E-mail [email protected]

Visit our tax facilitation center (located in all major cities) or any tax officeor

Visit our website at www.fbr.gov.pk
mailto:[email protected]://www.fbr.gov.pk/http://www.fbr.gov.pk/mailto:[email protected]


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Revenue DivisionFederal Board of RevenueGovernment of PakistanOctober, 2008

INTRODUCTION

This brochure explains the provisions of theIncome Tax Ordinance, 2001 governingwithholding tax in a simple and concisemanner. It mainly revolves around theobligations of the withholding agents as tocollection or deduction of tax at source, i.e.

o Identifying the withholding agents;

o Persons from whom tax is to be deductedor collected;

o Applicable rates of withholding taxes;

o Basis of withholding tax;o Time of deduction;o Time of deposit of tax deducted or

collected in the account of FederalGovernment;

o Frequency and time of submitting thestatements of tax deducted or collected;

o Applicable exemptions and reduced rates;and

o Liabilities of the withholding agents andconsequences of non-compliance.

A cross-index of dif ferent tax withholdingagents and the corresponding applicableprovisions of law is also given for quick andeasy reference.This brochure has been arranged sectionwise. Contents of this brochure are alsoavailable at our websitewww.fbr.gov.pk

DISCLAIMER:This brochure is to assist the taxpayers andreflects the legal position at the time ofprinting. In case of any conflict, the legalprovisions of the law shall prevail over thecontents of this brochure.

ContentsIntroduction 1Disclaimer 1Summary of withholding taxes 2Section 7- Shipping and Transport Business 2Section 148 Imports 2Section 149 Salary 4

Section 150 Dividend 4Section 151 (1) (a) -Profit on debt 4Section 152(1)- Payment to Non Residents 6Section 153(1) -Payment for 8

goods and servicesSection 153 (1A) -Payments For 9

Rendering Or Providing ServicesSection 153(A) -Payment to Non Residents 9

Media PersonSection 154(1) -Exports 9Section 155 - Income from Property 12Section 156 -Prizes and Wings 14Section 156A - Payments for 14

Petroleum ProductsSection 156B - Withdrawal 14

from Pension FundSection 231 A - Cash withdrawal form Bank 15

Section 231 B - Purchase of Motor Cars 15Section 233 - Brokerage and Commission 15233A (1)(a)& (b) -Commiss ion of Members of 16

Stock ExchangesSection 233 A (1)(c)- Trading of Shares 16

by the Members of Stock Exchanges.

Section 233 A (1)(d)- Financing of carry over trade 16(Badla) in shares by the membersof stock exchanges.

Section 234- Transport Motor Vehicles 17Section 234A -CNG Stations 17Section 235 -Electricit y Consumptions 18Section 236- Telephone Users. 18

Withholding agents liability to 19

Issue certificate of deduction andCollection of tax.

Withholding agents liability to 19Submit Monthly and annualStatements of tax col lected or deducted

Cross Index withho lding agent wise 21

Comments and suggestionsWe welcome your comments about this brochure andyour suggestions for future editions.

You can e-mail us at [email protected] can write to us at the following address:Facilitation and Tax Payer Education Wing,

Aziz Ghani Plaza, Fazal-e-Haq Road, Blue Area,Islamabad.Phone: 051-9202503 or 051-9204604

1

Collection and Deduction of Tax at Source
http://www.fbr.gov.pk/mailto:[email protected]:[email protected]://www.fbr.gov.pk/


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Section Person(s)liable tocollect ordeduct tax

Fromwhom

Rate On When Payable to thecredit of FederalGovernment

Statement(s) tax collected deducted

Potassic fertilizers imported inpursuance of EconomicCoordination Committee of thecabinets decision No ECC -155/12/2004 dated 9

thDecember

2004. (Clause: 13-E Part : II 2nd

Schedule

The following items as per (Clause:13-G Part: II 2nd Schedule).

i. Gold;

ii. Mobile telephone sets;iii. Silver;


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From whom Rate On When PayacredGove

14 9

(Salary)

Employer Employee Annual average rate (to be calculated as perrate card subject to applicable reductions intax)

( For details see FBRs brochure Taxationof Income from Salary)

Salary chargeable to

tax

At the time the

salary isactually paid

On

ded(Whe

by anthe .RuleWithi

ded

(In ot

150(Dividend)

Company Shareholders 10%

Reduced rates

7.5% - Paid by a purchaser of a powerproject privatized by WAPDA [Clause

(17) of Part II of 2nd Schedule].7.5% - Paid by a company set up for

power generation [Clause (20) of Part IIof 2nd Schedule].

Gross amount ofdividend

At the time thedividend is

actually paid

Withfro

of

for

Ru

151(1)(a)

(Profit ondebt)

Persons paying

yield or profit(profit on debt)on an account,

deposit or acertificate underthe NationalSavings Scheme

or Post OfficeSavings Account

Recipient of

yield or profit(profit ondebt)

10% Yield or profit

(profit on debt)on an account,

deposit or a

certificate underthe National

Savings Scheme

or Post Office

Savings Account

as reduced by

amount of Zakat,if any, paid by the

recipient underthe Zakat andUshr Ordinance,

1980

At the time the

yield orprofit (profit

on debt) is

credited tothe account

of the

recipient or

is actually

paid,

whichever isearlier.

On

deRule


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From whom Rate On When Payable to thecredit ofFederalGovernment

151(1)(b)(Profit ondebt)

Banking

Company

FinancialInstitution

Recipient of

profit on debt

on an account

or deposit

10% Profit on debt on an

account or deposit

maintained as reduced

by amount of Zakat, ifany, paid by therecipient under the

Zakat and Ushr

Ordinance, 1980

At the time the profit on debt is

credited to the account of the

recipient or is actually paid,

whichever is earlier

Within 7 days

from the end of

each fortnight.

Rule : 43(b)

151(1)(c)(Profit ondebt)

Federal

Government

Provincial

GovernmentLocal

Authority

Recipient of

profit on any

security

(profit on

debt)

10% Profit on debt on any

security (other than

those covered under

section 151(1)(a))

issued by the FederalGovernment or a

Provincial

Government or a localauthority as reducedby amount of Zakat, if

any, paid by the

recipient under the

Zakat and UshrOrdinance, 1980

At the time the profit on debt is

credited to the account of the

recipient or is actually paid,

whichever is earlier

On the day

deducted

(Where deducted

by and onbehalf of the

Government)

Rule:43(b)


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Section Person(s) liableto collect ordeduct tax

From whom Rate On When Payable tthe credit oFederalGovernment

151(1)(d)(Profit on

debt)

Banking CompanyFinancial Institution

Company as

defined in the

Companies

Ordinance, 1984Body Corporate

formed by or

under any law in

force in PakistanFinance Society

Recipient ofProfit on debt

other than

financial

Institution.

10% Profit on debt onany bond,

certificate,

debenture,

security or

instrument ofany kind asreduced by

amount of Zakat,

if any, paid bythe recipient

under the Zakat

and Ushr

Ordinance, 1980

At the time the profit ondebt is credited to the

account of the

recipient or is actually

paid, whichever is

earlier

Within 7 dayfrom the en

of eac

fortnight.

Rule:43(b)

152(1)

Payment

to Non

Residents

Every Person

paying royalty or

fee for technical

services to a non-resident

Non-Resident

Person

15% or lower

rate as per

agreement

foravoidance ofdouble

taxation

Gross amount of

royalty or fee for

technical

services

At the time the royalty

or fee for technical

services is actually

paid

On the da

deducted

(Where

deducted band on behaof th

Government)

Rule:43(a)

Within 7 day

from the en

of eacfortnight

(In other cases

Rule:43(b)


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Fromwhom

Rate On When Payable to thcredit of FederaGovernment

152(1A)Payment

to Non

Residents

Every Personmaking

payment for

execution of

contract etc.,

to a non-resident

Non-Resident

Person

6% or lower rateas per agreement

for avoidance of

double taxation

Gross amount of paymenton account of execution of

a contract or sub-contract

under a construction,

assembly or installation

project in Pakistan,including a contract forthe supply of supervisory

activities in relation to

such project; or

A contract for

advertisement servicesrendered by Television

Satellite Channels

Any other contract for the

construction or servicesrendered, relating thereto.

At the time theamount is

actually paid

On the dadeducted

(Where deducted b

and on behalf of th

Government)

Rule:43(a)

Within 7 days from

the end of eac

fortnight(In other cases)

Rule:43(b)

152(1AA)

Paymentto Non

Residents

Every Person

makingPayment of

Insurance

premium are

re- insurance

premium

Non-

ResidentPerson

5% of the gross

amount

Gross amount paid as

insurance premium or re-insurance premium.

At the time the

amount isactually paid

On the da

deducted(Where deducted b

and on behalf of th

Government)

Rule:43(a)

Within 7 days from

the end of eac

fortnight(In other cases)

Rule:43(b)


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From whom Rate On When Payable credit of Governm

152(2)

Paymentto Non

Residents

Every Person

making apayment to anon-resident(other than

royalty or fee fortechnical servicesor on executionof contract.

Non-resident

Person

30% or lower rate as per

agreement for avoidance ofdouble taxation

Gross amount of

any paymentchargeable totax including

profit on debts

but excludingroyalty and feefor technicalservices

At the time the

amount isactually paid

On the

deducte(Where

by and on the Govern

Rule:43(a)

Within 7 dthe endfortnigh

(In other caRule:43(b)

153(1)Payment forgoods and

services

FederalGovernment

Company

Association ofPersonsconstituted by,or under, law

ForeignContractor orConsultant

Consortium or

Joint Venture

Resident PersonPermanent

Establishmentin Pakistan of a

Non-Resident

Person

Sale of: Rice, cottonseed or

edible oils

1.5%

Any other goods3.5%

Services rendered orprovided 6%

Execution of contract6%

Reduced rateTransport 2%

Gross amount ofpayment onaccount of:

Sale of goods(inclusive ofsales tax);

Rendering orproviding ofservices; and

Execution of acontract, otherthan a contractfor the sale of

goods orrendering ofservices.

At the time theamount isactually paid

On thededucte

(Where

by and on the GovernRule:43(a)

Within 7 dthe endfortnigh

(In other ca

Rule:43(b)


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Section Person(s)liable tocollect or

deduct tax

From whom Rate On When Payable to thcredit of FederGovernment

153(1A)Payment

forRenderingor

providingandservices

Every Exporter

or an Export

House

Resident Person and

Permanent Establish-

ment in Pakistan of anon-Resident

0.5%Gross amount of

payment on account

of rendering orproviding of

services of stitching,

dying, printing,

embroidery,washing, sizing and

weaving

At the time the

amount is actually

paid

On the day deducted

(Where deducted b

and on behalf of thGovernment)

Rule:43(a)

Within 7 days fro

the end of eac

fortnight

(In other cases)

Rule:43(b)

153(A)Payment

to non

residentmedia

person

Every person Non resident mediaperson relaying from

outside Pakistan

10% Gross amount paidfor advertisement

services.

At the time ofpayment

On the day deducted(Where deducted b

and on behalf of th

Government)Rule:43(a)

Within 7 days fro

the end of eacfortnight

(In other cases)

Rule:43(b)

154(1)

Exports

Authorized

dealer inforeign

exchange

Exporter of goods 1% Foreign Exchange

proceeds

At the time of

realization ofexport proceeds

or indenting

commission

Within 7 days fro

the end of eacfortnight.Rule43(b


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Section Person(s)

liable tocollect ordeduct tax

From whom Rate On When Payable t

the credit oFederalGovernment

154 (2)

Exports

Authorized

dealer in

foreignexchange

Foreign indenting

commission

agents

Foreign indenting commission

5.00%

Reduced rates

Foreign

indenting

commission

At the time of

realization of

exportproceeds or

indenting

commission

Within 7 day

from the en

of eacfortnight.

Rule43(b)Export indenting commission on

export of goods. 5%

[Clause (5) of Part II of 2nd

Schedule]


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Fromwhom

Rate On When Payable to the credit ofFederal Government

Statemcollecdeduc

154(3)

Exports

Banking

Company

Every

Person

1%

Realization of

proceeds on account

of sale of goods to anexporter under aninland back-to-back

letter of credit

Realization ofpayments made

through crossed

cheques to indirectexporters against

Standard Purchase

Order in the format

prescribed by the

State Bank ofPakistan

At the time of

realization

of the saleproceeds

Within 7 days from the end of

each fortnight

Rule:43(b)

Monthdays (

(2) AnAnnuamonth

154(3A)

Exports

The Export

Processing

ZoneAuthority

Industrial

undertaking

s located inExport

Processing

Zones

1% Proceeds of the export

of goods

At the time of

export of

goods


each fortnight

Rule:43(b)

Monthdays ((2)AndAnnuamonth

154(3B)

Exports

Direct

Exporter or

Export Houseregistered

under DTRE

Rules, 2001

Indirect

exporter

(definedunder sub-

chapter 7 of

Chapter XIIof the

Customs

Rules, 2001

1% Payment against a firm

contract

At the time the

amount is

actually paid


each fortnight

Monthdays (

Rule:43(b) (2) AnAnnuamonth


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From whom Rate On When Payable credit oGovernm

155IncomefromProperty

Federal GovernmentProvincial

Government

Local AuthorityCompanyNon-Profit

Organization

Diplomatic Missionof a foreign state

Recipient of rent ofimmovable

property

a) The rate of tax to be deducted undersection 155, in the case of an individualand association of persons, shall be-

S.No Gross amountof rent

Rate of Tax

1 Where thegross amountof rent doesnot exceedRs.150,000.

Nil

2 Where thegross amountof rent exceeds

Rs.150,000 butdoes notexceedRs.400,000.

5 per cent ofthe grossamount

exceedingRs.150,000.

3 Where thegross amountof rent exceedsRs.400,000 butdoes notexceedRs.1,000,000.

Rs.12,500 plus[7.5] percent ofthe grossamountexceedingRs.400,000.

4 Where thegross amountof rent exceedsRs.1,000,000.

Rs.57,500]plus 10 percent of thegross amountexceedingRs.1,000,000.

Rent ofimmovable

property(including

rent offurnitureandfixtures,and

amounts forservicesrelating tosuch

property)

At the timethe rent isactually

paid

On the day (Where dedon behalGovernmen

Rule:43(a)

Within 7 dend of ea

(In other ca

Rule:43(b)


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From whom Rate On When Payable credit oGovernm

b) The rate of tax to be deducted undersection 155, in the case of a company,shall be-

S.No Gross amountof rent

Rate of Tax

1 Where thegrossamountof rent doesnot exceed

5 per cent ofthe grossamount of rent.

Rs.400,000.

2 Where the

grossamountof rentexceedsRs.400,000but does notexceedRs.1,000,000..

Rs.20,000 plus

[7.5] percent of thegross amountof rentexceedingRs.400,000.

3 Where thegrossamountof rentexceeds

Rs.1,000,000..

Rs.65,000 plus10per cent of thegrossamount of rent

exceedingRs.1,000,000.


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From whom Rate On When Payable to the cof FedGovernment

156

Prizes andWinnings

Every person

paying a prizeor winnings

Recipient of

prizes orwinnings

10% - On

prize of aprize bond20% - OnPrize or

winningsfrom araffle,lottery, quiz

or crosswordpuzzle; orprizeoffered by

companiesfor

promotion ofsale.

Prize on a prize bond;

Prize or winnings from araffle, lottery, quiz orcrossword puzzle;Prize offered by

companies forpromotion of sale

At the time the

prize orwinnings areactually paid

On the day deducted

(Where deducted byand on behalf of theGovernment)Rule:43(a)

Within 7 days fromthe end of eachfortnight(In other cases)

Rule:43(b)

156 A

Petroleumproducts

Every person

sellingpetroleumproducts to

petrol pumpoperator.

Petrol pump

operators

10% The amount of

commission/discountallowed to the petrol pumpoperator.

At the time of receiving

the amount of soldpetroleum products

On the day deducted (W

deducted by and on bof the Government)Rule:43(a)

Within 7 days from thof each fortnight (Incases)

Rule:43(b)

156B Pension FundManager

Recipient ofamount fromindividual

pension accountmaintained

under anyApproved

Pension Fund

Average rateof tax on thetaxableincome of 3

preceding

years

Any amount withdrawnbefore the retirement age; or

In excess of 25% of theaccumulated balance

withdrawn on or after theretirement age

At the time of makingthe payment

(Withdrawal)

Within 7 days from the each fortnightWithdrawal

frompensionfunds

Rule:43(b)


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From whom Rate On When Payable to theof FGovernment

231ACashWithdrawals from

banks

Banking Company Every Person makinga cash withdrawalexceeding Rs. 25,000

per day

0.3% Amountwithdrawn inexcess of Rs.25,000 per

day

At the time of makingthe payment

(Withdrawal)

Within 7 days frend of each fortn

Rule:43(b)

231 BPurchase

of MotorCars andJeeps

RegistrationAuthority

Every Person

EngineCapacity

Amount ofTax

upto850cc

Rs.7,500

851cc to1000cc

Rs.10,500

1001ccto1300cc

Rs.16,875

1301ccto1600cc

Rs.16,875

1601ccto1800cc

Rs.22,500

1801ccto2000cc

Rs.16,875

Above2000cc

Rs.50,000

Engine Capacity At the time ofRegistration

On the day d(Where deduc

and on behalfGovernment)

Rule:43(a)

233Brokerage and

Commission

FederalGovernmentProvincial

GovernmentLocal AuthorityCompany

Recipient ofbrokerage orcommission

10%

Association of

Personsconstituted by,or under, law

Reducedrate

AdvertisingAgents 5.0%[Clause (26) of Part II of2ndSchedule]

Brokerage andCommission

At the time thebrokerage orcommission is

actually paidOrAt the time of receiving

payment where the

agent retains thebrokerage orcommission out of

proceeds remitted

On the day deducte(Where deducted on behalf o

Government)Rule:43(a)Within 7 days fr

end of each fortn


15

(In other cases)Rule:43(b)


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From whom Rate On- When Payable to thecredit ofFederalGovernment

233A(1)(a)and

233A(1)(b)

Commission

of Membersof Stock

Exchange

Stock Exchangeregistered in

Pakistan

Members ofthe stock

exchange

0.01% Purchase and/or salevalue of the shares

At the time ofmaking the

payment or

receiving the

payment

Within 7 daysfrom the end of

each fortnight

Rule:43(b)

233A)1)(c)

Trading ofShares

Stock Exchange

registered in

Pakistan

Sellers of

shares

throughmembers of

the stock

exchange

0.01% Value of the shares

traded (Sale)

At the time of

making the

payment

Within 7 days

from the end of

each fortnightRule:43(b)

233(A)(1)(d)Financing of

carryover

trade in

shares

Stock Exchangeregistered in

Pakistan

Financiersthrough

members of

the stock

exchange

10% Amount of carry overcharge

At the time ofmaking the

payment

Within 7 daysfrom the end of

each fortnight

Rule:43(b)


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Fromwhom

Rate On When Payable tothe credit ofFederalGovernment

Sttaxde

234Tax onMotorVehicles

Personcollectingmotorvehicle tax

Owner ofmotorvehicle

In the case of goodstransport vehiclesranging from Rs. 1,200to Rs. 36,000 perannum

In case of passengertransport vehiclesplying for hire rangingfrom Rs. 25 to Rs. 100per seat per annum

Other private motor carsranging from Rs. 750 toRs. 8,000 per annum

Reduced rate Rs. 1,200Goods transportvehicles with ladenweight of 8120

kilograms or more aftera period of ten yearsfrom the date of firstregistration of thevehicle in Pakistan[Paragraph (1A) ofDivision III of Part IV of1st Schedule].

Registered ladenweight oftransportvehicles

Registered

seating capacityof passengertransportvehicles plyingfor hire

Engine capacity ofother privatemotorcars

At the time ofcollectingmotor vehicletax (if motorvehicle tax is

collected ininstallments,the tax is alsocollected ininstallments)

On the daycollected

Moda(2Anm

44

234ACNGStation

GasMarketingCompanies

CNGStationOperator

4% On the amount ofgas bill.

At the time ofpreparing thegas bill.

On the daycollected.

Moda(2Anm44


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18


From whom Rate On When Payable the crediFederalGovernm

235ElectricityConsumption

Personpreparingelectricityconsumption bill

CommercialandIndustrialconsumersof electricity

Ranging from Rs. 60to Rs. 1500 of themonthly bill (monthlybill Not exceeding20000)

_______________

Bill exceeding Rs20000 @ 10 %

Amount ofelectricityconsumptioncharges

Alongwith paymentof electricityconsumptioncharges

Within 7 dfrom end of efortnight

236Telephones

Personpreparingtelephonebill

Personissuing orsellingprepaidcards fortelephone

Telephonesubscriber

Purchaser ofprepaidtelephone

cards

In case of telephonesubscriber (Otherthen mobile phonewhere the amountexceeds Rs 1000 =

@ 10 % of theexceedingamount).

In the case ofsubscriber ofmobile telephoneand prepaidtelephone card =10% of the amountof bill or sales priceof pre-paidtelephone card

Amount of bill orsale price of apre-paid card

Alongwith paymentof telephone billor at the time ofissuance or saleof pre-paid cards

Within 7 dfrom end of efortnight


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Withholding agents liability to issuecertificate of deduction and collection of tax

Every withholding agent (person obliged tocollect or deduct tax at source) collecting ordeducting tax under the provisions of the Income

Tax Ordinance, 2001 is obliged to issuecertificate of tax collected or deducted, induplicate and serially numbered, in theprescribed form to the person from whom suchtax has been collected or deducted.

Where the tax is deducted from salary undersection 149 of the Income Tax Ordinance, 2001:

(a) The certificate of tax deducted is to beissued within 45 days from the end of eachfinancial year. Rule:41(1)

(b) Where the employment ceases before the

end of the financial year, the certificate is tobe issued for the period of employment inthat year within 7 days of the ceasing of theemployment or at the time of makingpayment of final settlement whichever islater.Rule:41(2)

Where the tax is collected or deducted under anyother provisions of the Income Tax ordinance,2001:(a) The certificate of collection or deduction is

to be issued within 15 days from the end ofeach financial year or discontinuation of

business, etc.Rule:42(1)

(b) If the person from whom tax has beencollected or deducted requests for theissuance of the certificate before the end ofthe financial year, the certificate is to beissued for the period in that year within 7days of the request made.Rule:42(2)

Where a certificate issued has been lost, stolenor destroyed, the recipient of the certificate mayrequest, in writing, that the issuer of the certificateissue a duplicate certificate.Rule41(3)

Where a request has been made, the issuer ofthe certificate shall comply with the request andthe certificate so issued shall be clearly markedduplicate.Rule:41(4)

All taxes collected or deducted are payable to theCommissioner of Income Tax by way of credit tothe Federal Government by remittance to theGovernment Treasury or deposit in an authorized

branch of the State Bank of Pakistan or theNational Bank of Pakistan.

Withholding agents liability to submitMonthly and annual statements of taxcollected or deducted

Every withholding agent (person obliged tocollect or deduct tax at source) under theprovisions of the Income Tax Ordinance, 2001 isrequired to submit necessary details andinformation after each month and annually.

A single consolidated statement for each month isto be submitted within 15 days from the end of theeach month in the prescribed form accompaniedwith evidence of deposit of tax collected ordeducted to the credit of the Federal Government.

Two separate annual statements are prescribed:

(a) One for the withholding agents obliged todeduct tax from salary under section 149 ofthe Income Tax Ordinance, 2001; and

(b) The other for withholding agents obliged tocollect or deduct tax under any otherprovision of the Income Tax Ordinance,2001.

Withholding agents liability to reconcile theMonthly and annual statements

Every withholding agent (person obliged tocollect or deduct tax at source) wherever requiredby the Commissioner, is obliged to furnish areconciliation of the amounts mentioned in theannual and monthly statements with the amounts

mentioned in the return of income, statements,related annexes and other documents submittedfrom time to time.

Consequences of non-compliance

The Income Tax Ordinance, 2001 takes amplecare for non-compliance of the provisions of lawrelating to withholding taxes and filing of monthlyand annual statements of tax collected anddeducted. These are explained below:

Deductions not allowed [Section 21]

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In case of not withholding tax at source thefollowing expenditures are not allowed asdeduction for the purpose of computing income:

o Salaryo Rent

o Brokerage or commissiono Profit on debto Payment to non-residento Payment for services or fee

Recovery of tax not collected or deducted

The person responsible for collecting ordeducting the tax at source as a withholdingagent, is personally liable for the amount of taxnot collected or deducted andpayable/recoverable as if it is due under anassessment order under the Income Tax

ordinance, 2001.

Recovery of tax col lected or deducted but notdeposited/paid

Similarly, the tax collected or deducted, if not paidis also payable/recoverable as if it is due underan assessment order under the Income Taxordinance, 2001 personally from the personresponsible to collect or deduct the tax as sourceas a withholding agent.

Charge of additional tax

In addition to the principal amount of the tax to becollected or deducted at source by the

withholding agent, a further tax additional tax isalso payable/recoverable at the rate of 12% perannum on the amount of tax not collected ordeducted or having collected or deducted notpaid computed for the period commencing on thedate the amount was required to be collected ordeducted and ending on the date on which it ispaid.

Prosecution

Any person who, without reasonable excuse, failsto comply with the obligation to collect or deducttax or having collected or deducted fails to paythe tax shall tantamount to committing an offencepunishable on conviction with a fine orimprisonment for a term not exceeding one year,or both.

Penalty for failure to furnish statement(s) of

tax collected or deducted

Any person responsible for collection ordeduction of tax at source as a withholding agent,without reasonable excuse, fails to furnish, withinthe time allowed for this purpose, anystatement(s) of tax collected or deducted is liablefor a penalty of Rs. 2,000.Sec:182(2)

If the default of not furnishing the statement(s)continues even after the imposition of penalty ofRs. 2,000, mentioned above, an additionalpenalty of Rs. 200 for each day of is also

attracted.Sec:182(3)

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Cross Index withholding agent wise

Persons liable to collect or deduct tax (Withholdingagents)

Applicable sect ions of the Income TaxOrdinance, 2001

Shipping agent 07,8, 143,169

Airline Agents 07,8, 144,169Gas Company 234A, 169Authorized dealer in foreign exchange 149, 154(1), 154(2)Association of persons 149, 152(1), 152(1A), 152(2), 153(1A),156,

233Association of persons constituted by, or under, law 149, 152(1), 152(1A), 152(2), 153(1),

153(1A), 156, 233Banking Company 149, 151(1)(a), 151(1)(b), 151(1)(d), 152(1),

152(1A), 152(2), 153(1), 154(1), 154(2),154(3), 155, 156, 231A, 233,

Body corporate formed by or under any law in force inPakistan

149, 151(1)(d), 152(1), 152(1A), 152(2),153(1), 153(1A), 155, 156, 233

Body incorporated by or under the law of a country outside

Pakistan relating to incorporation of companies

149, 152(1), 152(1A), 152(2), 153(1), 155,

156, 233Collector of Customs 148Company as defined under the Companies Ordinance, 1984 149, 151(1)(d), 152(1), 152(1A), 152(2),

153(1), 153(1A), 155, 156, 233Consortium 149, 152(1), 152(1A), 152(2), 153(1),

153(1A), 156Co-operative Society 149, 152(1), 152(1A), 152(2), 153(1),

153(1A), 155, 156, 233Diplomatic mission of a foreign state 155Direct Exporter 153(1A), 154(3B)Electricity Consumption Bill Preparing Authority 235Export House registered under DTRE Rule, 2001 153(1A), 154(3B)Export Processing Zone Authority 154(3A)

Federal Government 149, 151(1)(a), 151(1)(c), 152(1), 152(1A),152(2), 153(1), 153(1A), 155, 156, 233

Finance society 149, 151(1)(d), 152(1), 152(1A), 152(2),153(1), 155, 156, 233

Financial Institution 149, 151(1)(b), 151(1)(d), 152(1), 152(1A),152(2), 153(1), 154(1), 154(2), 155, 156, 233

Foreign association, whether incorporated or not, declaredto be a company by the Federal Board of Revenue

149, 152(1), 152(1A), 152(2), 153(1), 155,156, 233

Foreign consultant 149, 152(1), 152(1A), 152(2), 153(1), 156,233

Foreign contractor 149, 152(1), 152(1A), 152(2), 153(1), 156,233

Individual 149, 152(1), 152(1A), 152(2), 153(1A), 156

J oint Venture 149, 152(1), 152(1A), 152(2), 153(1), 156Local Authority 149, 151(1)(c), 152(1), 152(1A), 152(2),

153(1), 155, 156, 233Modaraba 149, 152(1), 152(1A), 152(2), 153(1), 155,

156, 233Motor Vehicle Tax Collection Authority 234Non-profit organization 149, 152(1), 152(1A), 152(2), 153(1), 155,

156, 233Pension Fund Manager 156B

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Person paying profit on debt on National Saving Schemesof Directorate of National Savings or Post Office SavingAccount

151(1)(a)

Persons selling petroleum products to petrol pump operators 156ATrust 149, 152(1), 152(1A), 152(2), 153(1), 155,

156, 233

Prepaid Card Selling Person 236Provincial Government 149, 151(1)(c), 152(1), 152(1A), 152(2),153(1), 153(1A), 155, 156, 233

Resident Company 150Society established or constituted by or under any law forthe time being in force

149, 152(1), 152(1A), 152(2), 153(1), 155,156, 233

Stock Exchanges Registered in Pakistan 233ATelephone Bill Preparing Person 236

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Other Facilitation and Tax Education Material Produced byFederal Board of Revenue

Publications

Brochure Universal self-assessment and record keeping

Brochure Business accounts, documents and records

Brochure Taxation of income from salary

Brochure -- Frequently asked questions about Taxation of Salary

Brochure Collection and deduction of tax at source

Brochure Charitable Organizations

Brochure Taxation of income from dividend

Brochure The Mechanism of Alternate Dispute Resolution

Brochure Taxpayers Charter

Brochure Import of vehicles

Brochure Passenger Baggage Rules

Brochure - Sales Tax Facilitation Guide

Quarterly Review

Year Book

Documents

Withholding Tax Slab