FBR notifies tax rates on brokerage, commission during 2022-2023

FBR notifies tax rates on brokerage, commission during 2022-2023

Federal Board of Revenue (FBR) has notified withholding tax rate on payment made for brokerage and commissioner during tax year 2022-2023.

The FBR issued updated withholding tax card for the year 2022-2023 after amendments made through Finance Act, 2022 to the Income Tax Ordinance, 2001.

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The withholding tax on payment to brokerage and commission made under Section 233 of Income Tax Ordinance, 2001.

Following are the withholding tax rates and the text of Section 233 of the Ordinance.

WITHHOLDING TAX RATES:

(1) The tax rate is 10 per cent for persons on the Active Taxpayers List (ATL) for advertising agents and the rate shall be increased to 20 per cent in case of persons not on the ATL.

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(2) The tax rate is 8 per cent for persons on the ATL for life insurance agents receiving less than Rs0.5 million per annum and the rate shall be increased to 16 per cent for persons not on the ATL.

(3) The tax rate is 12 per cent for persons on the ATL for persons not covered in (1) and (2) above and the tax rate shall be increased to 24 per cent for persons not on the ATL.

Section 233. Brokerage and commission

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(1) Where any payment on account of brokerage or commission is made by the Federal Government, a Provincial Government, a Local Government, a company or an association of person or individual having turnover of hundred million rupees or more (hereinafter called the “principal”) to a person (hereinafter called the “agent”), the principal shall deduct advance tax at the rate specified in Division II of Part IV of the First Schedule from such payment.

(2) If the agent retains Commission or brokerage from any amount remitted by him to the principal, he shall be deemed to have been paid the commission or brokerage by the principal and the principal shall collect advance tax from the agent.

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(2A) Notwithstanding the provisions of sub-section (1), where the principal is making payment on account of commission to an advertising agent, directly or through electronic or print media, the principal shall deduct tax (in addition to tax required to be deducted under clause (b) of sub-section (1) of section 153 on advertising services excluding commission), at the rate specified in Division II of Part IV of the First Schedule on the amount equal to-

A x 15 / 85

Where A = amount paid or to be paid to electronic or print media for advertising services (excluding commission) on which tax is deductible under clause (b) of sub-section (I) of section 153.

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(2B) Tax deducted under sub-section (2A) shall be minimum tax on the income of the advertising agent.

(3) Where any tax is required to be collected from a person under sub-section (1), such tax shall be the minimum tax on the income of such persons.

Explanation.— For the removal of doubt, it is explained that the income of person referred to in sub-sections (2B) and (3) means the amount on which tax is deductible under sub-sections (1) or (2A) of this section.