Withholding tax rates on interest income for 2021-2022

Withholding tax rates on interest income for 2021-2022

Federal Board of Revenue (FBR) has updated rates of withholding tax on interest income for the year 2021-2022.

WITHHOLDING TAX CARD 2021/2022

Under Section 151 of Income Tax Ordinance, 2001, every person payment profit/yield has to deduct tax from the gross amount of yield / profit from every person making payment of profit/yield from recipient of profit on debt at the time the yield (profit on debt) is credited to the account of the recipient is actually paid.

Under Section 151(1)(a) of Income Tax Ordinance, 2001 yield or profit (profit on debt) on account, deposit or a certificate under the National saving schemes or Post office savings account the tax rate shall be 15 per cent of the gross yield/profit paid. The tax rate shall be increased by 100 per cent i.e. 30 per cent for persons non on the Active Taxpayers List (ATL).

Minimum Tax on the profits on debt arising to a taxpayer, except Where-

(a) Taxpayer is a company; or

(b) Profit on debt is taxable u/s 7B.

Under Section 151(1)(b) of the Income Tax Ordinance, 2001, the profit on debt paid by banking company of financial institution on account or deposit maintained the tax rate shall be 15 per cent on the gross yield / profit paid. The tax rate shall be increased by 100 per cent i.e. 30 per cent for person not appearing on the ATL.

Minimum Tax on the profits on debt arising to a taxpayer, except Where-

(a) Taxpayer is a company; or

(b) Profit on debt is taxable u/s 7B.

Under Section 151(1)(c) of the Income Tax Ordinance, 2001, profit on securities, other than those mentioned in Section 151(1)(a), issued by federal / provincial government or a local government, the tax rate shall be 15 per cent of the gross yield/profit paid. The tax rate shall be increased by 100 per cent i.e. 30 per cent for person not appearing on the ATL.

Minimum Tax on the profits on debt arising to a taxpayer, except Where-

(a) Taxpayer is a company; or

(b) Profit on debt is taxable u/s 7B.

Section 151(1)(d)  of the Income Tax Ordinance, 2001, profit on bonds, certificates, debentures, securities or instruments of any kind (other than loan agreements between borrowers and banking companies or development financial institutions), the tax rate shall be 15 per cent of the gross yield / profit paid. The tax rate shall be increased by 100 per cent i.e. 30 per cent for persons not appearing on the ATL.

Minimum Tax on the profits on debt arising to a taxpayer, except Where-

(a) Taxpayer is a company; or

(b) Profit on debt is taxable u/s 7B.

Under Section 151(1A) of the Income Tax Ordinance, 2001, every special purpose vehicle or a company, at the time of making payment of a return on investment in sukuks to a sukuk holder shall deduct tax from the gross amount of return on investment at the rate specified in Division IB of Part III of the First Schedule.

The rate of tax imposed under section 151(1A) on return on investment in sukuks received from a special purpose vehicle shall be—

(a) 25 per cent in the case the sukuk-holder is a company;

(b) 12.5 per cent in case the sukuk-holder is an individual or an association of person, if the return on investment is more than one million; and

(c) 10 per cent in case the sukuk-holder is an individual and an association of person, if the return on investment is less than one million.”

Minimum Tax on the return on investment arising to a taxpayer, except Where-

(a) Taxpayer is a company; or

(b) Profit on debt is taxable u/s 7B.

Leave a Reply

You have to agree to the comment policy.