Tag: FBR

ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding tax rates on payment made to non-residents for tax year 2021 under Section 152 of Income Tax Ordinance, 2001.

The FBR updated withholding tax card 2020-2021 (up to June 30, 2020) after incorporating amendments made through Finance Act, 2020.

According to the withholding tax rates:

Under Section 152(1), every person shall deduct tax while making payments for royalties and fee for technical payments to non-resident.

The withholding tax rate shall be 15 percent of the gross amount and it shall be increased by 100 percent in case the person is not on the Active Taxpayers List (ATL).

Every person paying royalty or fee for technical services to a non-resident shall withholding tax on payment to non-resident person at the time the royalty or fee for technical services is actually paid

The tax shall be minimum tax as per section 6 read with section 8.

Under section 152(1A), the tax will be deducted from a non-resident person on the execution of;

a) Contract or sub-contract under a construction, assembly or installation project in Pakistan including a contract for the supply of supervisory activities relating to such project.

b) Any other contract for construction or services rendered relating there to.

c) Contract for advertisement services rendered by TV Satellite Channels.

The tax rate shall be 7 percent of the gross amount

The tax shall be collected by every person from non-resident person at the time the amount is actually paid.

The tax shall be minimum tax on the income of non-resident person arising from a contract.

Under Section 152(1AA), the tax will be deducted from non-resident on any payment of insurance premium or re-insurance to a non-resident person.

The tax shall be 5 percent of gross amount and 10 percent for persons not appearing in ATL.

The tax shall be collected by every person making the payments to non-resident person at the time the amount is actually paid.

The tax shall be minimum tax.

Under Section 152 (1AAA) tax will be deducted on payments for advertisement services from non-resident person relaying from outside Pakistan.

The tax rate shall be 10 percent of the gross amount.

The tax shall be collected by every person making payment to non-resident at the time the amount is actually paid.

The tax shall be minimum tax.

Under Section 152(1C), the tax shall be deducted on remittance outside Pakistan, of fee for off-shore digital services, chargeable to tax u/s 6, to a non-resident person on behalf of any resident or a permanent establishment of a non-resident in Pakistan.

The tax rate shall be 5 percent of the gross amount.

The tax shall be collected by banking company or financial institution from non- resident at the time the amount is actually paid.

Under Section 152(2) tax deduction on payment to non-resident, not otherwise specified.

The tax rate shall be 20 percent of the gross amount and the rate shall be 40 percent for persons not appearing on the ATL.

The tax shall be collected by every person making payments to non-resident person at the time the amount is actually paid.

The withholding tax shall be adjustable.

Under Section 152(2), as per clause 5AA of Part-II of the Second Schedule, the rate of tax to be deducted under sub-section (2) of section 152, in respect of payments to an individual, on account of profit on debt earned from a debt instrument, whether conventional or shariah compliant, issue by the Federal Government under the Public Debt Act, 1944 and purchased exclusively through a bank account maintained abroad, a non-resident Rupee account repatriable (NRAR) or a foreign currency account maintained with a banking company in Pakistan.

The tax rate shall be 10 percent  of the gross amount and the tax rate shall be increased by 100 percent in case person is not on the ATL.

The tax shall be collected by every person responsible for making payment to a non-resident person at the time of payment.

The tax shall be final.

Under Section 152(2A), every prescribed person making payment to a Permanent Establishment of Non- Resident.

For:

(a) Sale of goods

(i) In case of a company the tax rate shall be 4 percent of the gross amount.

(ii) Other than company cases the tax rate shall be 4.5 percent of the gross amount.

(b) (i) In the cases of 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 and certification, testing & training services.

The tax rate shall be 3 percent and the tax rate shall be increased by 100 percent in case persons are not on the ATL.

(ii) in case of a company the tax rate shall be 8 percent and it shall be 16 percent for persons not on the ATL.

(iii) Other than company cases the tax rate shall be 10 percent and the rate shall be increased by 100 percent in case persons are not on the ATL.

(c) Execution of a contract other than a contract for sale of goods or providing/ rendering of services.

(i) In case of sports persons the tax rate shall be 10 percent and it shall be 20 percent for persons not on the ATL.

(ii) Other than sports persons the tax rate shall be 7 percent and it shall be 14 percent in case persons are not on the ATL.

The tax shall be collected by every prescribed person from non-resident at the time amount is paid.

The tax shall be minimum tax for S.152(2A)(b) and the provisions of sub clauses (i), (ii) and (iii) of clause (b) of sub section (3) and sub-section (4A) of section 153 shall mutatis mutandis apply 152(2B)

Provided that tax deductible under clause (a) of sub-section (2A) shall not be minimum tax where payments are received for sale of goods by a company being a manufacturer of such goods.

Section 152A: Payment for Foreign Produced Commercials

Tax to be deducted from non-resident while making payments for foreign produced commercial for advertisement on any television channel or any other media.

The tax rate shall be 20 percent of the gross amount and it shall be 40 percent if persons are not on the ATL.

The tax shall be collected by every person responsible for making payment to a non-resident person at the time of payment. The tax shall be final.

ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding tax rates on profit on debt to be prevailed during Tax Year 2021. The FBR issued withholding tax card 2020/2021 after incorporating changes made through Finance Act, 2020.

The rates of withholding tax on profit on debt under Section 151 of Income Tax Ordinance, 2001 to be collected by person making payment of profit/yield from recipients of (profit on debt) at the time the yield (profit on debt) is credited to the account of the recipient or is actually paid, whichever is earlier.

According to the tax card:

Section 151(1)(a) Yield or profit (profit on debt) on account, deposits or a certificate under the National Saving Schemes or Post Office Saving Account

Up to Rs500,000 the tax rate shall be 10 percent of the gross yield/profit paid

Exceeding Rs500,000 the tax rate shall be 15 percent of the gross yield/profit paid and 30 percent if the person is not on the Active Taxpayers list (ATL).

The FBR said that it shall be 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) banking company or financial institution shall collect the withholding tax from recipient of profit on debt at the time the profit on debt is credited to the account of the recipient or is actually paid, whichever is earlier.

The tax rate shall be 10 percent of the gross yield / profit on debt on payment of up to Rs500,000.

On amount exceeding Rs500,000 the tax rate shall be 15 percent of the gross yield / profit on debt and it shall be increased by 100 percent in case person is not on the ATL.

The FBR said that the tax shall be 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) the federal/provincial government/local authorities shall collect tax on profit on securities, other than those mentioned in Section 151(1)(a), issued by federal/provincial government or a local government from recipient of (profit on debt) at the time the profit on debt is credited to the account of the recipient or is actually paid, whichever is earlier.

The tax rate shall be 10 percent of the gross yield/profit paid on amount up to Rs500,000.

On amount exceeding Rs500,000 the tax rate shall be 15 percent of the gross yield/profit paid, the tax rate shall be increased by 100 percent in case person is not on the ATL.

The FBR said that the tax shall be 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)(d) banking company, a financial institution, a company or finance society shall collect withholding tax on profit on bonds , certificates, debentures, securities or instruments of any kind (other than loan agreements between borrowers and banking companies or development financial institutions) from recipient of profit on debt at the time the profit on debt is credited to the account of the recipient or is actually paid, whichever is earlier.

The tax rate shall be 10 percent of the gross yield/profit paid on amount up to Rs500,000.

On amount exceeding Rs500,000 the tax rate shall be 15 percent of the gross yield/profit paid, the tax rate shall be increased by 100 percent in case person is not on the ATL.

The FBR said that the tax shall be 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.

ISLAMABAD: Federal Board of Revenue (FBR) has issued updated withholding tax card for salary income to be prevailed during Tax Year 2021 (2020-2021).

The FBR issued the withholding tax card 2020-2021 (updated up to June 30, 2020) after incorporating amendment made to Income Tax Ordinance, 2001 through Finance Act, 2020.

According to the withholding tax card, every person responsible for paying salary to an employee shall deduct tax from the amount paid under Section 149 of Income Tax Ordinance, 2001 as per given rates:

Salary slabs	Tax Rates on salary slabs
01. Where taxable income does not exceeds Rs600,000	0 percent
02. Where taxable income exceeds Rs600,000 but does not exceed Rs1,200,000	5 percent of the amount exceeding Rs600,000
03. Where taxable income exceeds Rs1,200,000 but does not exceeds Rs1,800,000	Rs30,000 plus 10 percent of the amount exceeding Rs1,200,000
04. Where taxable income exceeds Rs1,800,000 but does not exceed Rs2,500,000	Rs90,000 plus 15 percent of the amount exceeding Rs1,800,000
05. Where taxable income exceeds Rs2,500,000 but does not exceed Rs3,500,000	Rs195,000 plus 17.5 percent of the amount exceeding Rs2,500,000
06. where taxable income exceeds Rs3,500,000 but does not exceed Rs5,000,000	Rs370,000 plus 20 percent of the amount exceeding Rs3,500,000
07. Where taxable income exceeds Rs5,000,000 but does not exceed Rs8,000,000	Rs670,000 plus 22.5 percent of the amount exceeding Rs5,000,000
08. where taxable income exceeds Rs8,000,000 but does not exceeds Rs12,000,000	Rs1,345,000 plus 25 percent of the amount exceeding Rs8,000,000
09. Where taxable income exceeds Rs12,000,000 but does not exceed Rs30,000,000	Rs2,345,000 plus 27.5 percent of the amount exceeding Rs12,000,000
10. Where taxable income exceeds Rs30,000,000 but does not exceed Rs50,000,000	Rs7,295,000 plus 30 percent of the amount exceeding Rs30,000,000
11. Where taxable income exceeds Rs50,000,000 but does not exceed Rs75,000,000	Rs13,295,000 plus 32.5 percent of the amount exceeding Rs50,000,000
12. Where taxable income exceeds Rs75,000,000	Rs21,420,000 plus 35 percent of the amount exceeding Rs75,000,000

The FBR further said that under Section 149(3) of the Ordinance, every person responsible for making payment for directorship fee for fee for attending board meeting or such fee by whatever name called shall deduct 20 percent of the gross amount paid.

ISLAMABAD: Federal Board of Revenue (FBR) has issued updated withholding tax rates for imported goods. The FBR issued withholding tax card 2020-2021 after incorporating amendment made to Income Tax Ordinance, 2001 through Finance Act, 2020.

The FBR issued updated withholding tax rates applicable for imported goods under Section 148 of Income Tax ordinance, 2001.

The withholding tax shall be collected by collector of customs from importer of goods at the same time and manner as the customs duty is payable in respect of the goods imported.

The following category of importers shall pay withholding tax rate at one percent of the import value as increased by customs duty, sales tax and federal excise duty and two percent on those importers on appearing on the Active Taxpayers List (ATL):

(i) Persons importing goods classified in Part-I of the Twelfth Schedule

(ii) Industrial undertaking importing remeltable steel (PCT Heading 72.04) and directly reduced iron for its own use;

(iii) Persons importing potassic of Economic Coordination Committee of the Cabinet’s decision No. ECC-155/12/2004 dated the 9th December, 2004

(iv) Persons importing Urea;

(v) Manufactures covered under Notification No. S.R.O 1125(I)/2011 dated the 31st December, 2011 and importing items covered under S.R.O 1125(I)/2011 dated 31st December, 2011.

(vi) Persons importing Gold; and

(vii) Persons importing Cotton

(viii) Persons importing LNG

Two percent of the import value as increased by Custom duty, sales tax and federal excise duty and four percent on persons not appearing on ATL shall apply on (ix) persons importing goods classified in Part-II of the Twelfth Schedule.

5.5 percent of the import value as increased by Custom duty, sales tax and federal excise duty and 11 percent on persons not appearing on ATL on (X) persons importing goods classified in Part-III of the Twelfth Schedule.

Industrial undertaking importing Plastic raw material (PCT Heading 39.01 to 39.12) for its own use shall pay 1.75 percent withholding tax of the import value as increased by Custom-duty, sales tax and federal excise duty and 3.5 percent for persons not appearing on the ATL.

2. In case of manufacturers covered under rescinded Notification No. S.R.O 1125(I)/2011 dated the 31st December, 2011 as it stood on the 28th June, 2019 on import of items covered under the aforementioned S.R.O. The tax rate shall be one percent and two percent in case persons not appearing on the ATL.
3. In case of persons importing finished pharmaceutical products that are not manufactured otherwise in Pakistan, as certified by the Drug Regulatory Authority of Pakistan. Such persons shall pay four percent and 8 percent in case persons not appearing on the ATL.
4. Persons Importing Pulses shall pay 2 percent of the import value as increased by Custom-duty, sales tax and federal excise duty and four percent in case persons not appearing on the ATL.
5. Commercial importers covered under Notification No. S.R.O 1125(I)/2011 dated the 31st December, 2011 and importing items covered under S.R.O 1125(I)/2011 dated the 31st December, 2011 shall pay 3 percent of the import value as increased by custom-duty sales tax and federal excise duty and six percent in case persons not appearing on the ATL.

Commercial Importer importing Plastic raw material (PCT Heading 39.01 to 39.12) for its own use shall pay 4.5 percent of the import value as increased by Custom-duty, sales tax and federal excise duty and 9 percent in case persons not appearing on the ATL.

6. Persons importing coal shall pay 4 percent and 8 percent in case persons not appearing on the ATL.
7. Persons importing finished pharmaceutical products that are not manufactured otherwise in Pakistan as certified by the Drug Regulatory of Pakistan shall pay 4 percent and 8 percent in case persons not appearing on the ATL.
8. Ship breakers on import of ship shall pay 4.5 percent and 9 percent in case persons not appearing on the ATL.
9. Industrial undertakings not covered under S.No 1 to 6 shall pay 5.5 percent and 11 percent in case persons not appearing on the ATL.
10. Companies not covered under S. Nos 1 to 9 shall pay 5.5 percent and 11 percent in case persons not appearing on the ATL.
11. Persons not covered Under S.Nos1 to 10 shall pay 6 percent and 12 percent in case persons not appearing on the ATL.

On Import of Mobile Phones by any Person (individual, AOP, Company):

Withholding Tax Regime

C&F Value In CBUIn CKD/SKD in USD ($) )
Up to 30 except smart phones	Rs70	Rs0
Exceeding 30 and up to 100 and smart phones up to 100	Rs100	Rs0
Exceeding 100 and up to 200	Rs930	Rs0
Exceeding 200 and up to 350	Rs970	Rs0
Exceeding 350 and up to 500	Rs3,000	Rs5,000
Exceeding 500	Rs5,200	Rs11,500

Persons not appearing in the Active Taxpayers’ List :The applicable tax rate is to be increased by 100% (Rule-1 of Tenth Schedule to the Ordinance).

Section 148(7)

The tax required to be collected under this section shall be minimum tax on the income of importer arising from the imports subject to sub-section (1) of this section and this sub-section shall not apply [i.e Adjustable] in the case of Import of:

a. Raw material, plant, equipment & parts by an industrial undertaking for its own use;

b. motor vehicle in CBU condition by manufacturer of motor vehicle.

c. Large import houses as defined / explained in 148(7)(d)

d. A foreign produced film imported for the purposes of screening and viewing.

The tax collected under this section at the time of import of ships by ship-breakers shall be minimum tax. Section 148(8A).