KARACHI: Foreign exchange companies are responsible for collecting advance tax on remitting abroad the education related expenses.
The Federal Board of Revenue (FBR) recently updated Income Tax Ordinance, 2001 under which Section 236R explained the advance tax on remitting amount abroad for education expenses.
Section 236R: Collection of advance tax on education related expenses remitted abroad
Sub-Section (1): There shall be collected advance tax at the rate specified in Division XXIIV of Part-IV of the First Schedule on the amount of education related expenses remitted abroad.
Rate of collection of tax under section 236R shall be 5percent of the amount of total education related expenses.
Sub-Section (2): Banks, financial institutions, foreign exchange companies or any other person responsible for remitting foreign currency abroad shall collect advance tax from the payer of education related expenses.
Sub-Section (3): Tax collected under this section shall be adjustable against the income of the person remitting payment of education related expenses.
Sub-Section (4): For the purpose of this section, “education related expenses” includes tuition fee, boarding and lodging expenses, any payment for distant learning to any institution or university in a foreign country and any other expense related or attributable to foreign education.