ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding tax rates on payments for goods and services during tax year 2021.
The FBR updated withholding tax card 2020-2021 after incorporating amendments made to Income Tax Ordinance, 2001 through Finance Act, 2020.
Under Section 153 of Income Tax Ordinance, 2001 every prescribed person shall collect withholding tax from resident person; Resident Person; and Permanent Establishment in Pakistan of a Non-Resident at the time the amount is actually paid for goods & services
Under Section 153(1)(a) the tax rate for sale of rice, cotton seed oil and edible oil shall be 1.5 percent of the gross amount and the tax rate shall be increased by 100 percent in case persons are not on the Active Taxpayers List (ATL).
The tax rate for supply made by distributors of fast moving consumer goods:
In case of company 2 percent of gross amount
Other than company the tax rate shall be 2.5 percent of gross amount
The tax rate shall be increased by 100 percent in case persons are not on the ATL.
Tax rate for supply made to Utility Stores Corporation of Pakistan:
Persons (other than company) 1.5 percent of gross amount and the tax rate shall be increased by 100 percent in case persons are not on the ATL.
Provided that the payment shall be made only in respect of supply of tea, spices, salt, dry milk, sugar, pulses wheat flour and ghee for the period commencing from the 7th day of April, 2020 and ending on 30th day of September, 2020
Provided that this clause shall not be applicable to supply of tea, spices, salt and dry milk which are sold under a brand name.
Provided further that this clause shall not be applicable where rate of tax under clause (a) of sub-section (1) of section 153 is less than 1.5% of the gross amount of payment under any provisions of the ordinance
For sale of any other goods:
In case of a company the tax rate shall be 4 percent of the gross amount.
Other than company the tax rate shall be 4.5 percent of the gross amount
The tax rate shall be increased by 100 percent in case persons are not on the ATL.
The FBR said that in case of goods:
No deduction of tax where payment is less than Rs. 75,000/- in aggregate during a financial year [S.153(1)(a)]
The tax shall be minimum tax for all except in the following cases where it shall not be minimum tax on sale or supply of goods, by:
(i) a company being manufacturers of such goods or
(ii) Public company listed on registered Stock Exchange in Pakistan.
Under Section 153(1)(b)
Ever prescribed person shall collect withholding tax from resident person; Resident Person; and Permanent Establishment in Pakistan of a Non-Resident at the time the amount is actually paid
i. Transport services, freight forwarding services, air cargo services, courier services, man power outsourcing services, hotel services, security guard services, software development services, IT Services and IT enabled services as defined in clause (133) of Part I of the Second Schedule, tracking services, advertising services (other than by print or electronic media), share registrar services, engineering services, car rental services, building maintenance services, services rendered by Pakistan Stock Exchange Ltd. & Pakistan Mercantile Exchange Ltd. , inspection, certification, testing & training services.;
The tax rate shall be 3 percent of the gross amount and the rate shall be 6 percent in case persons not on the ATL.
ii. In case of rendering or providing of services other than as mentioned at (i) above;
a) In case of company 8 percent of the gross amount
b) In any other case 10 percent of the gross amount
c) In respect of persons making payment to electronic & print media for advertising services 1.5 percent of the gross amount
The tax rate shall be increased by 100 percent in case persons are not on the ATL.
The FBR said that in case of services:
No deduction of tax where payment is less than Rs. 30,000/- in aggregate during a financial year [S.153(1)(b)]
The tax shall be minimum tax.
Under Section 153(1)(c)
Every prescribed person shall collect / deduct withholding tax from resident person; Resident Person; and Permanent Establishment in Pakistan of a Non-Resident at the time the amount is actually paid.
Execution of Contracts
i) In case of sportsperson 10 percent
ii) In the case of companies : 7 percent
iii) In the case of persons other than companies 7.5 percent
The tax rate shall be increased by 100 percent in case persons not on the ATL.
Minimum Tax for all whereas it will remain adjustable where payments are received on account of execution of contracts by Public Company listed on registered Stock Exchange in Pakistan
Under Section 153(2)
Every exporter/export house shall collect/deduct withholding tax from resident person; Resident Person; and Permanent Establishment in Pakistan of a Non-Resident at the time of making the payment.
Every Exporter or Export House shall deduct Tax on payments in respect of services of stitching, dying, printing etc. received/provided.
1 percent of the gross amount and the rate shall be increased by 100 percent in case persons not on the ATL.
The tax shall be minimum tax.
Under Section 153B
Every person paying an amount of royalty, in full or in part including by way of advance shall collect/deduct withholding tax from resident person at the time of making gross payment of royalty, in full or in part including by way of advance (including Federal Excise Duty and provincial sales tax, if any)
Tax to be deducted on payment of royalty to resident person at 15 percent of the gross amount payable (including FED & Provincial Sales Tax, if any).
The tax rate shall be increased by 100 percent in case persons not on the ATL.
The tax withheld shall be adjustable.
