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  • Income tax on payment for brokerage, commission

    Income tax on payment for brokerage, commission

    Section 233 of Income Tax Ordinance, 2001 has defined rate of income tax on payment on account of brokerage and commission.

    The Federal Board of Revenue (FBR) issued the Income Tax Ordinance, 2001 updated up to June 30, 2021. The Ordinance incorporated amendments brought through Finance Act, 2021.

    Following is the text of Section 233 of Income Tax Ordinance, 2001:

    233. Brokerage and commission. — (1) Where any payment on account of brokerage or commission is made by the Federal Government, a Provincial Government, a Local Government, a company or an association of person or

    individual having turnover of hundred million rupees or more (hereinafter called the “principal”) to a person (hereinafter called the “agent”), the principal shall deduct advance tax at the rate specified in Division II of Part IV of the First Schedule from such payment.

    (2) If the agent retains Commission or brokerage from any amount remitted by him to the principal, he shall be deemed to have been paid the commission or brokerage by the principal and the principal shall collect advance tax from the agent.

    (2A) Notwithstanding the provisions of sub-section (1), where the principal is making payment on account of commission to an advertising agent, directly or through electronic or print media, the principal shall deduct tax (in addition to tax required to be deducted under clause (b) of sub-section (1) of section 153 on advertising services excluding commission), at the rate specified in Division II of Part IV of the First Schedule on the amount equal to-

    A x 15/85

    Where A = amount paid or to be paid to electronic or print media for advertising services (excluding commission) on which tax is deductible under clause (b) of sub-section (I) of section 153.

    (2B) Tax deducted under sub-section (2A) shall be minimum tax on the income of the advertising agent.

    (3) Where any tax is required to be collected from a person under sub-section (1), such tax shall be the minimum tax on the income of such persons.

    (Disclaimer: The text of the above section is only for information. Team PkRevenue.com makes all efforts to provide the correct version of the text. However, the team PkRevenue.com is not responsible for any error or omission.)

    For income tax rates on brokerage and commission please visit the following link:

    Tax rates on brokerage, commission for 2021-2022

  • Tax rates on brokerage and commission for 2021-2022

    Tax rates on brokerage and commission for 2021-2022

    The tax rates on brokerage and commission under Section 33 of the Income Tax Ordinance, 2001 for the year 2021-2022, shall be as follow:

    (more…)
  • Rate of income tax on brokerage, commission

    Rate of income tax on brokerage, commission

    ISLAMABAD: Federal Board of Revenue (FBR) has updated rate of income tax on brokerage and commission to be applicable for 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 rate of tax for deduction or collection brokerage and commission under Section 233 of Income Tax Ordinance, 2001 shall be as set out in the following table:

    S.No.PersonRate of Tax
    (1)(2)(3)
    1.Advertising Agents10%
    2.Life Insurance Agents where commission received is less than Rs.0.5 million per annum8%
    3.Persons not covered in 1 and 2 above12%

    Following is Section 233 under which the tax is applicable on brokerage and commission:

    233. Brokerage and commission. — (1) Where any payment on account of brokerage or commission is made by the Federal Government, a Provincial Government, a Local Government, a company or an association of persons constituted by, or under any law (hereinafter called the “principal”) to a person (hereinafter called the “agent”), the principal shall deduct advance tax at the rate specified in Division II of Part IV of the First Schedule from such payment.

    (2) If the agent retains Commission or brokerage from any amount remitted by him to the principal, he shall be deemed to have been paid the commission or brokerage by the principal and the principal shall collect advance tax from the agent.

    (2A) Notwithstanding the provisions of sub-section (1), where the principal is making payment on account of commission to an advertising agent, directly or through electronic or print media, the principal shall deduct tax (in addition to tax required to be deducted under clause (b) of sub-section (1) of section 153 on advertising services excluding commission), at the rate specified in Division II of Part IV of the First Schedule on the amount equal to-

    A X 15/85

    Where A = amount paid or to be paid to electronic or print media for advertising services (excluding commission) on which tax is deductible under clause (b) of sub-section (I) of section 153.

    (2B) Tax deducted under sub-section (2A) shall be minimum tax on the income of the advertising agent.

    (3) Where any tax is required to be collected from a person under sub-section (1), such tax shall be the minimum tax on the income of such persons.

  • Withholding tax rates for brokerage, commission updated

    Withholding tax rates for brokerage, commission updated

    ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding tax rates for brokerage and commission income for tax year 2021.

    The FBR issued withholding tax card 2020-2021 incorporating amendment to Income Tax Ordinance, 2001 made through Finance Act, 2020.

    Under Section 233 of Income Tax Ordinance, 2001 federal government, provincial government, local authority, company, association of persons (AOP) are required to collect/deduct withholding tax at the time the brokerage or commission is actually paid.

    The deducted amount shall be minimum tax.

    The withholding tax rates for brokerage and commission shall be:

    In case of:

    (i) advertising agents shall pay 10 percent and persons not on the Active Taxpayers List (ATL) shall be 20 percent.

    (ii) life insurance agents where commission received is less than Rs0.5 million per annum the tax rate shall be 8 percent and for persons not appearing on the ATL the tax shall be 16 percent.

    (iii) the persons not covered in 1 & 2 the tax rate shall be 12 percent and for persons not appearing on the ATL the tax shall be 24 percent.

    Under Section 233AA of the ordinance the members stock exchange (margin financier & lenders) trading finance shall pay withholding tax.

    The National Clearing Company of Pakistan Limited (NCCPL) will collect withholding tax at 10 percent of the mark-up or interest from the members stock exchange (margin financier & lenders) trading finance at the time of mark-up / interest is paid.

    The tax is adjustable against total tax liability.