If you are paying withholding tax to prescribed withholding agents under the Federal Board of Revenue (FBR), it is crucial to obtain a certificate of collection or deduction. This certificate is essential for filing your income tax return for tax year 2026.
What is a Withholding Tax Certificate?
A withholding tax certificate serves as proof that tax has been collected or deducted from payments made to you or on your behalf. Without this certificate, your tax return may be incomplete or face verification issues by the FBR.
Legal Basis: Section 164
Section 164 of the Income Tax Ordinance, 2001 governs the issuance and use of withholding tax certificates.
Key Provisions:
1. Issuance of Certificates
O Every person collecting tax under Division II, deducting tax under Division III, or collecting/deducting tax under Chapter XII must provide:
Computerized Payment Receipt (CPR) or equivalent document
Certificate stating the amount of tax collected or deducted
O For SWAPS agents, the SWAPS Payment Receipt (SPR) replaces the CPR.
2. Use in Income Tax Return
O When filing a taxable income return, attach copies of CPR or SPR to prove the tax has been properly collected or deducted.
O This ensures credit for tax already paid and avoids disputes with FBR.
Why is it Important?
💡 Proof of Compliance: Validates that withholding tax was properly collected or deducted.
💡 Reduces Audit Issues: Avoids complications during tax assessments or audits.
💡 Accurate Tax Credit: Ensures proper adjustment of tax paid against your total tax liability.
💡 Mandatory for Returns: Required under law to file a complete and accurate tax return.
Important Tip:
📌 Always request a withholding tax certificate immediately after tax deduction. Maintain digital and physical copies for future reference.
Disclaimer: This article is for informational purposes only. Consult the FBR or a qualified tax professional for official guidance regarding withholding tax certificates.