Section 164A of the Income Tax Ordinance 2001 sets out digital tax payment requirements, SWAPS Payment Receipts and consequences for agents failing to integrate with the system.

The Federal Board of Revenue (FBR) has defined the settlement mechanism for transactions subject to withholding tax through the Synchronized Withholding Administration and Payment System (SWAPS) for Tax Year 2027.

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According to the Income Tax Ordinance 2001, updated up to June 30, 2026, Section 164A establishes the framework for notified persons required to deduct or collect tax to integrate with SWAPS and operate as SWAPS agents within the prescribed timeframe and manner.

Under the provision, the FBR may notify any person or class of persons required to deduct or collect tax to integrate with the system through a notification in the official gazette.

Tax collected or deducted by a notified SWAPS agent and credited to the Commissioner through digital means will be treated as paid under Section 160 of the ordinance.

The law also provides that a SWAPS Payment Receipt (SPR) will replace the Computerised Payment Receipt (CPR) for relevant tax compliance purposes once payment has been made under the prescribed mechanism.

However, notified SWAPS agents that fail to integrate with the FBR will not qualify for tax credits under Part X of Chapter III or exemptions available under the ordinance.

Meanwhile, taxpayers whose tax has been collected or deducted by notified SWAPS agents will remain eligible to claim credit for the withheld amount against the SPR issued by the agent.

Other provisions of the Income Tax Ordinance 2001 will continue to apply to SWAPS agents unless specifically addressed by Section 164A.

Tax Year 2027 runs from July 1, 2026, to June 30, 2027.