FBR retains withholding tax rates of 8%, 10% and 12% on brokerage and commission income under Section 233 for Tax Year 2027.
ISLAMABAD: The Federal Board of Revenue (FBR) has notified the withholding tax rates applicable to brokerage and commission income for Tax Year (TY) 2027 under the updated Income Tax Ordinance, 2001, following amendments introduced through the Finance Act, 2026.
The revised rates became effective from July 1, 2026, and have been incorporated into the Income Tax Ordinance, 2001, updated to June 30, 2026. The withholding tax provisions continue to apply to commissions and brokerage earned by various categories of taxpayers under Section 233 of the Ordinance.
Withholding tax rates for brokerage and commission
According to the updated law, the following withholding tax rates will apply during Tax Year 2027:
Category Withholding tax rate
| Advertising agents | 10% |
| Life insurance agents receiving annual commission of less than Rs500,000 | 8% |
| All other persons receiving brokerage or commission | 12% |
The FBR said these rates will continue to govern tax deductions or collections at source on eligible brokerage and commission payments.
Concessional rate for life insurance agents
Under Section 233, life insurance agents whose annual commission does not exceed Rs500,000 will continue to benefit from a concessional withholding tax rate of 8%.
Advertising agents will remain subject to a 10% withholding tax on commission income.
Standard rate for other commission earners
All other persons receiving brokerage or commission income who do not qualify under the specified concessional categories will be subject to a 12% withholding tax.
The withholding tax is required to be deducted or collected at source by the payer in accordance with the provisions of Section 233 of the Income Tax Ordinance, 2001.
Updated through Finance Act, 2026
The notified rates form part of the Income Tax Ordinance, 2001, updated to June 30, 2026, incorporating amendments introduced through the Finance Act, 2026.
The notification provides certainty to withholding agents, businesses, financial institutions, insurance companies, advertising agencies and commission earners regarding the applicable tax deduction regime for brokerage and commission income during Tax Year 2027.