KARACHI: The Federal Board of Revenue (FBR) has announced revised advance tax rates applicable on brokerage and commission for the tax year 2025-26.
These changes were introduced following amendments to the Income Tax Ordinance, 2001, through the Finance Act, 2025. The updated withholding tax card reflects the new rates that will apply to various categories of agents and service providers.
Section 233 of the Income Tax Ordinance governs the taxation of brokerage and commission. It specifies how advance tax must be collected by principals — including federal, provincial, and local governments, companies, associations of persons, and high-turnover individuals — when making payments to agents.
The latest advance tax rates are as follows:
| Section | Description | Tax Rate (ATL) | Tax Rate (Non-ATL) |
| 233 – Brokerage & Commission | Advertising agents | 10.00% | 20.00% |
| 233 – Brokerage & Commission | Life insurance agents (earning less than Rs. 0.5M annually) | 8.00% | 16.00% |
| 233 – Brokerage & Commission | Other persons not covered above | 12.00% | 24.00% |
Key Provisions under Section 233
1. Any payment made on account of brokerage or commission by the principal to an agent is subject to advance tax deduction at specified rates.
2. If the agent withholds brokerage or commission from payments remitted to the principal, it will still be treated as income on which advance tax is due.
3. For advertising agents, additional provisions require that tax be calculated on amounts paid to electronic or print media using the prescribed formula, ensuring compliance with both Section 233 and Section 153 of the ordinance.
4. Taxes deducted on brokerage and commission are treated as minimum tax on the income of the respective agents, meaning no further liability is payable on this income unless otherwise specified.
The FBR emphasized that these measures aim to streamline revenue collection and ensure proper documentation of all payments involving brokerage and commission. Tax experts believe these updates will encourage compliance among agents and service providers while broadening the overall tax base.
Disclaimer: This article is intended for informational purposes only and should not be considered legal or financial advice. Advance tax rates on brokerage and commission are subject to amendments in tax laws, official notifications, and policy changes by the Federal Board of Revenue (FBR). Readers are advised to consult qualified tax professionals or FBR’s official resources for accurate guidance and compliance requirements.