Presented by

Mohsin Nusrullah FCA

Scope of Presentation
Withholding Income Tax
Mode of Collection by authorities

Taxability of tax deducted and collected

Applicable rates of withholding tax
Time for deposit of tax

Consequences of Non deduction

Issues to withholding agents

Withholding Sales Tax

History of Withholding Tax

Main Source of Revenue by Govt.
Scope is increasing

Mainly salary and interest in Income tax Act1922.

In Income Tax Ordinance 1979 major scope extended

in 1990.
Scope further enhanced by introducing concept of non
filer in 2014 Finance Bill.

Mode of Collection of Tax

Modes of
Collection of
Income Tax

Deductio
n of Tax

Collection
of Tax

Advance
Tax

And obviously if default than recovery.

Payment
with
Return

Taxability of amount deducted or

collected
It may be adjustable tax
It may be final tax

It may be minimum tax

Withholding Tax Rates

Section
ref.

148

Description of
transaction /
payment
Import of goods
(other than foreign
produced films and
hybrid cars)

Detail

Previous
rate

New Rates
in finance bill
2014

Withholding agent
(Person responsible to
collect or deduct
withholding tax)

By industrial
undertaking (for their
own use)

5%

5.5%

Collector of Customs

By companies

5%

5.5%

Collector of Customs

Import by individuals
and AOPs

5.5%

6%

Collector of Customs

Taxability
Final/Adjustable/
Minimum Tax

Final Tax
commercial
importer

149

Salary

Remuneration under
employment

Average
rate of tax
on
monthly
salary
calculated
on the
basis of
slabs.

Every employer.

Adjustable

150

Dividend

Dividend declared or
distributed by a
company for power
generation.

7.5%

Payer

Final

Other companies.

10%

10% filer and

15% for non
fillers

Payer

for

Section
ref.
151

Description of
transaction /
payment
Profit on debt
(interest)

Detail

Previous
rate

New
Rates in
finance
bill 2014
10% for
filer &
15% for
non filler
if profit
exceeds
500,000/-

Withholding agent
(Person responsible to
collect or deduct
withholding tax)
Payer

Yield on an account,
deposit or certificate
under National Saving
Scheme or Post Office
Savings Account.

10%

Profit on security
issued by federal,
provincial, local
government.
Profit on account or
deposit maintained
with the banking
company or financial
institution.
Profit on any bond,
certificate, debenture,
security or instrument
of any kind (other than
a loan agreement
between a borrower
and a bank or a
development finance
institution) paid to any
person other than
financial institution.

10%

Government

10%

Banking company or
financial institution
(being payer of interest)

10%

Company formed
or registered under
Companies
Ordinance, 1984.
Company formed
under any other
law.
Banking company.
Financial
institution.
Finance society
(being payer of
profit).

Taxability
Final/Adjustabl
e/Minimum
Tax
Final
for
individual and
AOP
while
adjustable for
companies. The
excess 5% for
non filer is
adjustable.

Section
ref.
153

153

153

Description of
transaction /
payment
Sale of goods

Rendering or
providing of service

Execution of
contract (other
than contract for
supply of goods or
rendering of
services)

Detail

Rice, cotton seeds

or edible oils.

of other goods
o
Supplier as
a company;
or
o
Supplier is
an
individual
or AOP

Transport service.

Other services;
o
Where
service
provider is
a company.
o
Where
service
provider is
an
individual
or AOP.

Previous
Rate

New Rates
in finance
bill 2014

1.5%

3.5%

4%

4%

4.5 %

2%

2%

6%

8%

7%

10%

Contractor is a
company.

6%

7%

Contractor is other
than company.

6.5%

7.5%

1.5%

Withholding agent
(Person responsible to
collect or deduct
withholding tax)

Federal
government

Company

AOP constituted
under any law

Non-profit
organization

Foreign contractor
/ consultant

Consortium / joint
venture

Individual and AOP

where turnover is
Rs. 50 million or
above in a tax year.

Person registered
under Sales Tax
Act, 1990.

Taxability
Final/Adjustable/
Minimum Tax

Final for AOP and

Individual while
adjustable
for
companies
in
certain cases

Minimum tax

Final for individual

AOP & company
except listed co

Section
ref.
154

155

Description of
transaction / payment
Export

Rent

Detail

Previous Rate

New Rates
in finance bill
2014

Withholding agent (Person

responsible to collect or
deduct withholding tax)

On realization of
foreign exchange
proceeds on
account of
export of goods.

1%

1%

Authorized dealer in foreign

exchange.

On realization of
foreign exchange
proceeds on
account of the
commission due
to an indenting
agent.

5%

5%

Authorized dealer in foreign

exchange.

Where owner is
a company.

15%

Where owner is
individual or
AOP.

Annual rent

150,000 or less
Nil
150,0011,000,000
10%
1,000,001 and
above
85000 +15%

Federal / provincial /
local government.
Company
Non-profit
organization and
charitable institution.
Diplomatic mission.
Private education
institution, a boutique,
beauty parlour, a
hospital, a clinic or a
maternity home.
Individual or AOP
paying an annual rent
of Rs. 1.5 million and
above in a year.
Any other person
notified by the FBR.

Taxability
Final/Adjustable/
Minimum Tax
Final Tax

Adjustable

Section
ref.
156

Prize bond or
crossword
puzzle.

Raffle, lottery,
prize on
winning a quiz,
prize offered
by companies
for promotion
or sale.
Commission on
discount allowed to
petrol pump operator
on sale of petroleum
products.
Withdrawal in excess
of Rs. 50,000 a day.

15%

New Rates in
finance bill
2014
15%

20%

20%

Payer

10%

12%

Persons selling petroleum

product.

Final

0.3%

0.3% filer and

0.5% non filer

Banking company.

Adjustable

or cancellation against
cash, of any
instrument including
demand draft, pay
order, etc.

0.3%

0.3% of
amount
exceeding
25000 in a day

Adjustable

Rs. 10,000
to Rs.
150,000
depending
upon CC
power of
the motor
vehicle.
10%

Rs. 10,000 to
250,000 for
filer and Rs.
10,000 to
450,000 for
non filer

Banking company, nonbanking financial institution,

exchange company or any
authorized dealer of foreign
exchange.
Motor vehicle registering
authority of Excise & Taxation
Department.

Final

Description of
transaction / payment
Prize and winning

156A

Petroleum products

231A

Cash withdrawal from

banks

231AA

Banking transactions

231B

Registration of a new
locally manufactured
motor vehicle

233

Brokerage and
commission

Detail

Brokerage and
commission paid by
principal to agent.

Previous
Rate

12 % and 7.5%
for
adverti
sing
agent

Withholding agent (Person

responsible to collect or
deduct withholding tax)
Payer

Federal / provincial /
local government.
Company
AOP constituted
under any law.

Taxability
Final/Adjustable/
Minimum Tax
Final

Adjustable

Section
ref.

Description of
transaction / payment

New Rates in
finance bill 2014
Detail

Previous Rate

Withholding agent (Person

responsible to collect or
deduct withholding tax)

Taxability
Final/Adjustable/
Minimum Tax

233A

Collection by stock
exchange

or purchase of
shares in lieu of
tax on the
commission
earned by stock
exchange
members.

0.01% of the sale

/ purchase value.

0.01% of the sale

/ purchase value.

Registered stock exchange in .

Adjustable

233AA

Collection by NCCPL

Profit, mark up
or interest
earned by the
member of stock
exchange,
margin financer
and lender for
securities.

10%

10%

NCCPL.

Adjustable

234

Tax on motor vehicle

along with vehicle tax,
annually.

Annually paid
along with
motor vehicle
tax.

Various
depending upon
the cc power or
capacity of the
vehicle.

1000 to 12000
for filer and 1000
to 24000 for non
filer

Person collecting motor

vehicle tax.

Adjustable

234A

Gas bill to CNG station by

gas company.

Gas
consumption

4% of gas
consumption
charges.

4% of gas
consumption
charges.

Person preparing gas

consumption bill.

Final

235

Electricity bill.

Amount of
electricity bill of
commercial or
industrial
consumers.

Various
depending upon
the amount of
monthly bill.

Various and 10%

on bill exceeding
20,000. while of
domestic bills
exceeding
100,000 tax at
7.5% as per 235A

Person preparing electricity

bill.

Adjustable while
minimum
in
certain cases

Section
ref.
236

236A

Description of
transaction / payment
Telephone users

by auction

Detail

Previous Rate

New Rates in
finance bill
2014

Withholding agent (Person

responsible to collect or deduct
withholding tax)

Taxability
Final/Adjustable/
Minimum Tax

Telephone
subscriber
s other
than
mobile
phone
subscriber
s (where
the
amount of
monthly
bill
exceeds
Rs. 1,000).

10% of amount
exceeding Rs.
1,000.

10% of amount
exceeding Rs.
1,000.

Person preparing telephone bill.

Adjustable

Subscriber
of mobile
telephone
and
prepaid
telephone
cards or
sale of
units
through
electronic
or other
medium.

15% of amount
of bill or sale
price.

14% of amount
of bill or sale
price.

Person issuing / selling prepaid

card and unit.

adjustable

10% of gross
sale price.

10% of gross
sale price.

Seller.

Adjustable

by public auction
or tender, of any
property or goods
including goods
confiscated or
attached.

Section
ref.

236B

236C

236D

236G

Descript
ion of
transact
ion /
paymen
t
Airline
ticket

Detail

Domestic air tickets.

Previous
Rate

New Rates in
finance bill
2014

Withholding agent
(Person responsible to
collect or deduct
withholding tax)

Taxability
Final/Adjus
table/Mini
mum Tax

5% of
gross
amount of
air ticket.
0.5% of
amount of
considera
tion
received.

5% of gross
amount of air
ticket.

Person preparing air

ticket.

adjustabl
e

1% while for
non filler 2%

Person responsible for

registering or attesting
the transfer of
immovable property.

adjustabl
e

Owner, lease holder,

operator or manager of;

Marriage hall

Marquee

Hotel

Restaurant

Commercial lawn

Club

Community place

Any other place

used for the
purpose.
Manufacturer or
commercial importer.

adjustabl
e

or
transfer
of
immova
ble
properti
es
Functio
ns and
gatherin
gs.

On registration or attestation the

transfer of immovable property.

Arranging or holding a function in a

marriage hall, marquee, hotel,
restaurant, commercial lawn, club, a
community place or any other place
used for such purpose including
providing food, service or other
facility.

10% of
the
amount of
bill.

5% of the
amount of
bill.

to
distribut
ors,
dealers
or
whole
sellers.

Sale by manufacturer or commercial

importer of electronics, sugar,
cement, iron and steel products,
fertilizer, motor cycle, pesticides,
cigarettes, glass, textile, beverages,
paint, or foam sector.

0.1% of
gross
amount of
sale.

0.1% for filer

and 0.2% for
non filer
while 0.2%
for fertilizer
filer and 0.4%
for non filer

adjustabl
e

Section
ref.

Description of
transaction / payment

236H

to retailers.

236I

Fees of educational
institution

236K

Purchaser of
Immovable
property exceeding
3 million

Detail
of above items
to retailers by
manufacturers,
distributors,
dealers, whole
sellers or
commercial
importers.
Fee paid to
educational
institutions.

From the
purchaser of
immovable
property

Previous Rate
0.5% of gross
amount of sale.

New Rates in
finance bill
2014
0.5% of gross
amount of
sale.

5% of gross
amount of fee.

1% from
Filer and
2% from
non filer

Withholding agent (Person

responsible to collect or
deduct withholding tax)
Manufacturer, distributor,
dealer, whole seller or
commercial importer.

Taxability
Final/Adjustable/
Minimum Tax

adjustable

Person preparing fee voucher

or challan.

Adjustable

Registration authority

adjustable

Withholding

S.No. WITHHOLDING TAX DEDUCTION

Head of paymentOUT OF THE PAYMENT TO NON-RESIDENTS
MECHANISM FOR
tax rate

General Rate
20%
1

Pak source fee for technical service or royalty where the said income are not
effectively connected to PE in
(a)

2
(b)
(c)

A contract or sub-contract under a construction, assembly or

installation project in , including a contract for the supply of
supervisory activities in relation to such project; or
Any other contract for construction or service rendered relating
thereto; or
A contract for advertisement services rendered by T.V. Satellite
Channels.

15%

6%

Insurance or reinsurance premium

5%

Services of non-resident media person

10%

Payment to permanent establishment in of non-resident person for:

i)
the sale of goods;
ii)
the rendering or providing of services; and
iii)
on the execution of a contract, other than a contract for the sale of
goods or the rendering of or providing services.

3.5%
6% (reduced rate of 2% for transport
services)
6%

S.No.

Head of payment

Withholding
tax rate

Similar rates as applicable to resident in relation

to payment on account of;
Salary - 149
Dividend - 150
Prize and winnings etc. 156
Brokerage & commission 233

Relevant slab
10% or 7.5%
15% or 20%
10%

TimeS.No
forTaxDeposit
of
Tax
Deducted
deducted / collected by Deadline to deposit with
.

Federal Government

1.

Federal Government or on On the day of deduction

behalf
of
Federal
Government

1.

Other cases

Within 7 days from the end

of each week ending on every
Sunday

Consequences of Non Deduction

Recovery may be made from withholding agent.
Disallowance of expenses

Default surcharge
Penalty

Issues for Withholding Agents

Filing of withholding statements.
Penalties for non filing even tax deducted but

statements could not filed in time.

Filer and Non filer status identification.
Principal activity of person whom tax to be deducted.
Audits of withholding agents and a lot of record
keeping.

Sales Tax Special Procedure

Withholding Rules

SRO 897(1)2013 dated 04th October 2013

Changes in withholding regime

through sro 897(1)/2013
Sales Tax special procedure (withholding) rules, 2007

requires the following persons to withhold sales tax on

purchases made by them:
a) Federal and provincial govt. departments
b) Autonomous bodies
c) Public sector organizations
d) Companies as defined under income tax ordinance 2001
which is registered for sales tax, federal excise or income
tax,
e) Recipient of services of advertisement, who are registered
for sales tax
f) Person registered as exporter

SRO 897(1)/2013 continues

Prior to amendment made by SRO 897, such person were

required to withheld sales tax equal to 1/5th of the total

sales tax in case of purchases from the registered persons.
The amount of withholding has now been reduced to 1/10th
in the case of registered wholesalers, dealers (including
petroleum dealers)or distributors only.
In case of govt. institutions referred to in (a), (b) and (c)
who are assigned a Free Tax Number are now required to
withhold 100 percent sales tax on purchases made from
unregistered suppliers, who are liable to be registered but
not actually registered.

Thank You