Rate of tax on payment through debt, credit cards

Rate of tax on payment through debt, credit cards

ISLAMABAD: Federal Board of Revenue (FBR) has updated rate of income tax to be collected on the payment made abroad through credit or debit cards during tax year 2021 (July 01, 2020 to June 30, 2021).

The FBR issued Income Tax Ordinance, 2001 (updated up to June 30, 2020) after incorporating amendments brought through Finance Act, 2020.

The FBR updated the rate of tax on payment made under Section 236Y of the Income Tax Ordinance, 2001.

The rate of tax to be deducted under section 236Y shall be 1 percent of the gross amount remitted abroad.

Following is the text of Section 236Y of Income Tax Ordinance, 2001:

236Y. Advance tax on persons remitting amounts abroad through credit or debit or prepaid cards.—(1) Every banking company shall collect advance tax, at the time of transfer of any sum remitted outside Pakistan, on behalf of any person who has completed a credit card transaction, a debit card transaction, or a prepaid card transaction with a person outside Pakistan at the rate specified in Division XXVII of Part IV of the First Schedule.

(2) The advance tax collected under this section shall be adjustable.

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