Tag: Federal Board of Revenue

The Federal Board of Revenue is Pakistan’s apex tax agency, overseeing tax collection and policies. Pakistan Revenue is committed to providing timely updates on the Federal Board of Revenue to its readers.

Tax rates on usage of phone, internet applicable during 2022-2023

Federal Board of Revenue (FBR) has notified withholding tax rates on use of phone and internet applicable during the year 2022-2023.

The FBR issued the withholding tax card 2022-2023 after incorporating amendments made through Finance Act, 2022 to the Income Tax Ordinance, 2001.

READ MORE: Electricity withholding tax not applicable on ATL domestic consumers

Tax authorities collect withholding tax on the usage of phone and internet under Section 236 of the Income Tax Ordinance, 2001.

Following are the tax rates and text of Section 236 of the Ordinance:

WITHHOLDING TAX RATES:

— In the case of a telephone subscriber (other than mobile phone subscriber) where the amount of monthly bill exceeds Rs1,000, the tax rate is 10 per cent of the exceeding amount of the bill.

READ MORE: Tax rates on goods, passenger transport vehicles during 2022-2023

— In the case of subscriber of internet, mobile telephone and pre-paid internet or telephone card, the tax rate is 15 per cent of the amount of bill or sales prices of internet pre-paid card or prepaid telephone card or sale of unit through any electronic medium or whatever form.

Section 236: Telephone and internet users

(1) Advance tax at the rates specified in Division V Part IV of the First Schedule shall be collected on the amount of –

(a) telephone bill of a subscriber;

READ MORE: FBR notifies tax rates on brokerage, commission during 2022-2023

(b) prepaid cards for telephones;

(c) sale of units through any electronic medium or whatever form; and

(d) internet bill of a subscriber; and

(e) prepaid cards for internet.

(2) The person preparing the telephone or internet bill shall charge advance tax under sub-section (1) in the manner telephone or internet charges are charged.

READ MORE: Non-ATL to pay 200% more tax on motor vehicle purchase during 2022-2023

(3) The person issuing or selling prepaid cards for telephones or internet shall collect advance tax under sub-section (1) from the purchasers at the time of issuance or sale of cards.

(3A) The person issuing or selling units through any electronic medium or whatever form shall collect advance tax under sub-section (1) from the purchaser at the time of issuance of sale of units.

READ MORE: FBR notifies tax rates on prize bond, lottery winning during 2022-2023

(4) Advance tax under this section shall not be collected from Government, a foreign diplomat, a diplomatic mission in Pakistan, or a person who produces a certificate from the Commissioner that his income during the tax year is exempt from tax.

READ MORE: Tax rates for rental income from immovable property during 2022-2023

October 26, 2022
New deadline for filing income tax returns ends on Oct 31, 2022

About six days are left in the new deadline given by the Federal Board of Revenue (FBR) for filing income tax returns. The revenue body extended the date for filing annual returns up to October 31, 2022.

The last date was September 30, 2022 for filing income tax return for tax year 2022. However, due to various issues on the online portal and complaints of stakeholders the date was extended.

The FBR extended the date for filing income tax returns for tax year 2022 up to October 31, 2022 through Circular No. 16 of 2022.

Stakeholders are still not satisfied with the performance with the online portal of the FBR for filing income tax returns.

Tax practitioners said that subject to some exemptions, tax rate of 20 per cent had been imposed on deemed income calculated at five per cent of fair market value of capital assets situated in Pakistan.

The fair market has been defined in Section 68 of the Income Tax Ordinance, 2001 and has also been notified by the FBR through number of SROs.

READ MORE: No audit of IT sector due to fixed tax regime: FBR chairman

The tax practitioners pointed out that filing income tax returns by providing details of immovable property under Section 7E were uphill task and many returns were not completed due to cumbersome procedure.

Senior tax officials, however, said that the return filing portal was functioning smoothly and large number of taxpayers had already discharge their national duty by filing their returns.

They said that the all the taxpayers other than corporate taxpayers are required to file annual return of income for tax year 2022 by October 31, 2022.

They said that taxpayers including salaried persons, business individuals, association of persons (AOPs) and companies other than having account year July to June are required to file the return of income.

READ MORE: Electricity withholding tax not applicable on ATL domestic consumers

The corporate entities having financial year between July 01 to June 30 are required to file their income tax returns by December 31 every year.

The FBR through SRO 978(I)/2022 dated June 30, 2022 issued income tax return form for tax year 2022 giving statutory time to taxpayers for making compliance in filing of return.

Section 14 of Income Tax Ordinance, 2001, highlighted the categories of taxpayers, who are required to file their annual return of income and wealth statement.

According to Income Tax Ordinance, 2001, following class of taxpayers are required to file return of income:

READ MORE: Tax rates on goods, passenger transport vehicles during 2022-2023

— every company

— every person (other than a company) whose taxable income for the year exceeds the maximum amount that is not chargeable to tax under this Ordinance for the year

— any non-profit organization as defined in clause (36) of section 2;

— every person whose income for the year is subject to final taxation under any provision of this Ordinance

Any person not covered by above clauses are also required to file return of income who,—

(i) has been charged to tax in respect of any of the two preceding tax years;

(ii) claims a loss carried forward under this Ordinance for a tax year;

READ MORE: FBR notifies tax rates on brokerage, commission during 2022-2023

(iii) owns immovable property with a land area of five hundred square yards or more or owns any flat located in areas falling within the municipal limits existing immediately before the commencement of Local Government laws in the provinces; or areas in a Cantonment; or the Islamabad Capital Territory;

(iv) owns immoveable property with a land area of five hundred square yards or more located in a rating area;

(v) owns a flat having covered area of two thousand square feet or more located in a rating area;

(vi) owns a motor vehicle having engine capacity above 1000 CC;

(vii) has obtained National Tax Number; or

(viii) is the holder of commercial or industrial connection of electricity where the amount of annual bill exceeds rupees five hundred thousand;

(ix) is a resident person registered with any chamber of commerce and industry or any trade or business association or any market committee or any professional body including Pakistan Engineering Council, Pakistan Medical and Dental Council, Pakistan Bar Council or any Provincial Bar Council, Institute of Chartered Accountants of Pakistan or Institute of Cost and Management Accountants of Pakistan; or

(x) is a resident person being an individual required to file foreign income and assets statement under section 116A.

READ MORE: Non-ATL to pay 200% more tax on motor vehicle purchase during 2022-2023

The FBR said that filing of income tax return is also mandatory for persons or classes of persons notified by the Board with the approval of the Minister in-charge.

It further said that return of income is also mandatory for every individual whose income under the head ‘Income from business’ exceeds rupees three hundred thousand but does not exceed rupees four hundred thousand in a tax year is also required to furnish return of income from the tax year.

October 25, 2022
No audit of IT sector due to fixed tax regime: FBR chairman

ISLAMABAD: Asim Ahmad, Chairman, Federal Board of Revenue (FBR) on Monday said there is no audit of the IT sector due to fixed tax regime.

There is no audit of IT sector export-oriented companies through budgetary measures in the current financial year for ensuring ease of doing business and reducing the cost of tax compliance.

READ MORE: Electricity withholding tax not applicable on ATL domestic consumers

“As fixed and final tax regime has been introduced in this fiscal year therefore, no tax or audit notices will be sent to the IT sector professionals and easier documentation will be the priority,” FBR chairman said.

Special Assistant to the Prime Minister on youth affairs Miss Shaza Fatima and the Prime Minister’s task force on Information technology and Telecom sector, convened a meeting in the Prime Minister’s office to discuss IT sector exports taxation issues and the impact thereof particularly of small and medium IT companies and software houses, with Chairman FBR Asim Ahmad, officials of the Ministry of IT and representatives of PASHA.

READ MORE: Tax rates on goods, passenger transport vehicles during 2022-2023

The Prime Minister Mian Shehbaz Shareef constituted a task force to devise ways to increase the Information Technology exports by $3 billion till 2023.

On the note of exemption from the proposed 0.25 per cent tax, this will remain and it is a quarter of what the other exporters pay.

In the Final Tax Regime, the Federal Board of Revenue has agreed in principle to resolve sales tax registration and return filing issues.

READ MORE: FBR notifies tax rates on brokerage, commission during 2022-2023

The definitions of IT in the June 2022 Finance Act were deliberated upon, and found to be all inclusive. The Federal Board of Revenue has also agreed in principle to propose necessary changes in law for all IT exports to attain the benefit of final tax regime.

In principle the FBR agreed upon the proposal that if the Provincial consensus is reached, Federal Excise Duty (FED) can be reduced from 19.5 per cent to 17 per cent for Telecom sector.

The funds received by the IT sector through applications like Payoneer etc. will be given the benefit of final tax regime through necessary changes in the law, if required.

READ MORE: Non-ATL to pay 200% more tax on motor vehicle purchase during 2022-2023

October 24, 2022
Electricity withholding tax not applicable on ATL domestic consumers

Domestic consumers of electricity are not subject to withholding income tax if their names are in the Active Taxpayers List (ATL).

The Federal Board of Revenue (FBR) has issued updated withholding tax card 2022-2023 after incorporating amendments made through Finance Act, 2022 to the Income Tax Ordinance, 2001.

READ MORE: Tax rates on goods, passenger transport vehicles during 2022-2023

The FBR collects withholding tax on the electricity consumption under Section 235 of the Income Tax Ordinance, 2001.

Following are the withholding tax rates and text of the Section 235:

WITHHOLDING TAX RATES ON ELECTRICITY

For commercial and industrial consumers:

1. There will be no tax on gross amount of bill up to Rs500

2. The rate of withholding tax shall be Rs10 per cent of the amount where gross amount of bill exceeds Rs500 but does not exceed Rs20,000.

READ MORE: FBR notifies tax rates on brokerage, commission during 2022-2023

3. The tax shall be Rs1950 plus 12 per cent of the amount exceeding Rs20,000 for commercial consumers. Rs1,950 plus 5 per cent of amount exceeding Rs20,000 for industrial consumers where gross amount of bill exceeds Rs20,000.

For domestic consumers: (The tax is applicable on person not appearing on ATL)

The rate of tax to be collected on domestic electricity consumption shall be: (i) zero percent the amount of monthly bill is less than Rs. 25,000; and (ii) 7.5 per cent if the amount of monthly bill is Rs. 25,000 or more.

READ MORE: Non-ATL to pay 200% more tax on motor vehicle purchase during 2022-2023

Section 235. Electricity consumption

(1) There shall be collected advance tax at the rates specified in Division IV of Part-IV of the First Schedule on the amount of electricity bill of a commercial or industrial or domestic consumer:

Provided that the provisions of sub-section (1) shall not apply to a domestic consumer of electricity if his name appears on the Active Taxpayers’ List.

(1A) In addition to tax collectible under sub-section (1), there shall be collected tax at the rates given in the Division IV of Part IV of First Schedule from retailers and service providers as provided under section 99A of the Ordinance:

Provided that the tax shall not be collectible under this sub-section if the tax has been collected from the person under sub-section (9) of section 3 of the Sales Tax Act, 1990 as provided in the general order issued under section 99A of the Ordinance.

READ MORE: FBR notifies tax rates on prize bond, lottery winning during 2022-2023

(2) The person preparing electricity consumption bill shall charge advance tax under sub-section (1) in the manner electricity consumption charges are charged.

Explanation.— For removal of doubt, it is clarified that for the purposes of this section electricity consumption bill referred to in sub-section (2) means electricity bill inclusive of sales tax and all incidental charges.

(3) Advance tax under this section shall not be collected from a person who produces a certificate from the Commissioner that his income during tax year is exempt from tax or that he has discharged advance tax liability under section 147 or whose entire income is subject to final tax regime or minimum tax regime under any provisions of this Ordinance other than this section.

READ MORE: Tax rates for rental income from immovable property during 2022-2023

(4) Under this section, —

(a) in the case of a taxpayer other than a company, tax collected upto bill amount of three hundred and sixty thousand Rupees per annum shall be treated as minimum tax on the income of such persons and no refund shall be allowed;

(b) in the case of a taxpayer other than a company, tax collected on monthly bill over and above thirty thousand rupees per month shall be adjustable; and

(c) in the case of a company, tax collected shall be adjustable against tax liability.

October 24, 2022
Tax rates on goods, passenger transport vehicles during 2022-2023

Federal Board of Revenue (FBR) has issued rates of withholding tax on goods and passenger transport vehicles to be paid during the year 2022-2023.

The FBR updated withholding tax card 2022-2023 after incorporating amendments made through Finance Act, 2022 to the Income Tax Ordinance, 2001.

READ MORE: FBR notifies tax rates on brokerage, commission during 2022-2023

The tax authorities collect withholding tax on goods and passenger transport vehicles under Section 234 of the Income Tax Ordinance, 2001.

Following are withholding tax rates and text of Section 234 of the Ordinance:

WITHHOLDING TAX RATES:

——————————————————————

Withholding tax is Rs2.50 per kg of leden weight goods transport vehicles.

READ MORE: Non-ATL to pay 200% more tax on motor vehicle purchase during 2022-2023

Withholding tax is Rs1,200 per annum in case of vehicles above 8,120 kg of laden weight.

——————————————————————-

For passenger transport vehicle per seat:

4 or more persons but less than 10 persons, the tax rate is Rs200 per seat per annum in case of non-air conditioned and Rs375 in case of air conditioned.

10 or more persons but less than 20 person, the tax rate is Rs500 per seat per annum in case of non-air conditioned and Rs750 in case of air conditioned.

READ MORE: FBR notifies tax rates on prize bond, lottery winning during 2022-2023

20 persons or more, the tax rate is Rs1,000 per seat per annum in case of non-air conditioned and Rs1,500 in case air conditioned.

Federal Board of Revenue (FBR) has notified withholding tax rate on payment made for brokerage and commissioner during tax year 2022-2023.

——————————————————————-

Section 234: Tax on motor vehicles

(1) Any person at the time of collecting motor vehicle tax shall also collect advance tax at the rates specified in Division III of Part IV of the First Schedule.

(2) If the motor vehicle tax is collected in instalments or lump sum the advance tax may also be collected in instalments or lump sum in like manner.

READ MORE: Tax rates for rental income from immovable property during 2022-2023

(2A) In respect of motor cars used for more than ten years in Pakistan, no advance tax shall be collected after a period of ten years.

(3) In respect of a passenger transport vehicle with registered seating capacity of ten or more persons, advance tax shall not be collected after a period of ten years from the first day of July of the year of make of the vehicle.

(4) In respect of a goods transport vehicle with registered laden weight of 7 less than 8120 kilograms, advance tax shall not be collected after a period of ten years from the date of first registration of vehicle in Pakistan.

READ MORE: FBR notifies withholding tax rates for exports during 2022-2023

(5) Advance tax collected under this section shall be adjustable.

“(6) For the purpose of sub-sections (1) and (2) “motor vehicle” shall include the vehicles specified in sub-section (7) of section 231B.”

October 23, 2022
FBR notifies tax rates on brokerage, commission during 2022-2023

Federal Board of Revenue (FBR) has notified withholding tax rate on payment made for brokerage and commissioner during tax year 2022-2023.

The FBR issued updated withholding tax card for the year 2022-2023 after amendments made through Finance Act, 2022 to the Income Tax Ordinance, 2001.

READ MORE: Non-ATL to pay 200% more tax on motor vehicle purchase during 2022-2023

The withholding tax on payment to brokerage and commission made under Section 233 of Income Tax Ordinance, 2001.

Following are the withholding tax rates and the text of Section 233 of the Ordinance.

WITHHOLDING TAX RATES:

(1) The tax rate is 10 per cent for persons on the Active Taxpayers List (ATL) for advertising agents and the rate shall be increased to 20 per cent in case of persons not on the ATL.

READ MORE: FBR notifies tax rates on prize bond, lottery winning during 2022-2023

(2) The tax rate is 8 per cent for persons on the ATL for life insurance agents receiving less than Rs0.5 million per annum and the rate shall be increased to 16 per cent for persons not on the ATL.

(3) The tax rate is 12 per cent for persons on the ATL for persons not covered in (1) and (2) above and the tax rate shall be increased to 24 per cent for persons not on the ATL.

Section 233. Brokerage and commission

READ MORE: Tax rates for rental income from immovable property during 2022-2023

(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.

READ MORE: FBR notifies withholding tax rates for exports during 2022-2023

(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.

READ MORE: Tax rates on payments for goods, services during 2022-2023

(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.

Explanation.— For the removal of doubt, it is explained that the income of person referred to in sub-sections (2B) and (3) means the amount on which tax is deductible under sub-sections (1) or (2A) of this section.

October 23, 2022

Non-ATL to pay 200% more tax on motor vehicle purchase during 2022-2023

Persons not on Active Taxpayers List (ATL) are required to pay 200 per cent more withholding tax for purchasing motor vehicles during 2022-2023.

Federal Board of Revenue (FBR) issued withholding tax card 2022-2023 after incorporating changes made through Finance Act, 2022 to the Income Tax Ordinance, 2001.

According to the withholding tax card 2022-2023, the tax authorities have increased burden on the persons not on the Active Taxpayers List (ATL).

Following are the withholding tax rate on purchase of motor vehicles or registration:

Sr. No.	Engine Capacity	ATL	Non-ATL
1.	Upto 850 CC	Rs10,000	Rs30,000
2.	851 CC to 1000 CC	Rs20,000	Rs60,000
3.	1001 CC to 1300 CC	Rs25,000	Rs75,000
4.	1301 CC to 1600 CC	Rs50,000	Rs150,000
5.	1601 CC to 1800 CC	Rs150,000	Rs450,000
6.	1801 CC to 2000 CC	Rs200,000	Rs600,000
7.	2001 CC to 2500 CC	Rs300,000	Rs900,000
8.	2501 CC to 3000 CC	Rs400,000	Rs1,200,000
9.	Above 3000 CC	Rs500,000	Rs1,500,000

Provided that in cases where engine capacity is not applicable and the value of vehicle is Rupees five million or more, the rate of tax collectible shall be 3 per cent of the import value as increased by customs duty, sales tax and federal excise duty in case of imported vehicles or invoice value in case of locally manufactured assembled vehicles.

Following are the withholding tax rates at the time of transfer of registration to be collected by provincial excise and taxation department.

Sr. No.	Engine Capacity	ATL	Non-ATL
1.	Upto 850 CC	Nil	Nil
2.	851 CC to 1000 CC	Rs5,000	Rs15,000
3.	1001 CC to 1300 CC	Rs7,500	Rs22,500
4.	1301 CC to 1600 CC	Rs12,500	Rs37,500
5.	1601 CC to 1800 CC	Rs18,750	Rs56,250
6.	1801 CC to 2000 CC	Rs25,000	Rs75,000
7.	2001 CC to 2500 CC	Rs37,500	Rs112,500
8.	2501 CC to 3000 CC	Rs50,000	Rs150,000
9.	Above 3000 CC	Rs62,500	Rs187,500

Provided that where the engine capacity is not applicable and value of rupee is five million or more, the rate of tax collectable shall be rupee twenty thousand.

Provided further that the rate of tax to be collected under this clause shall be reduced by ten per cent each year from the date of first registration in Pakistan.

Following the withholding tax rates to be collected by every motor vehicle registration authority of Excise and Taxation Department at the time of registration, if the locally manufactured motor vehicle has been sold prior to registration by the person who originally purchased it from the local manufacturer.

Sr. No.	Engine Capacity	ATL	Non-ATL
1.	Upto 1000 CC	Rs100,000	Rs300,000
2.	1001 CC to 2000 CC	Rs200,000	Rs600,000
3.	2001 CC and above	Rs400,000	Rs1,200,000

October 23, 2022

FBR’s efforts help Pakistan exit FATF grey list

ISLAMABAD: The Federal Board of Revenue (FBR) has said that its efforts in preventing tax crimes helped Pakistan to exit grey list of Financial Action Task Force (FATF).

Like many other governmental organizations, FBR has played a key role in completing the FATF action plans relating to DNFBPs, cash smuggling, investigating tax crimes for money laundering and confiscating the proceeds of tax frauds.

In 34 items of the FATF action plans, FBR has directly dealt with at least 8 actions and spearheaded the process of their implementation.

In order to ensure compliance with regard to DNFBPs, FBR has issued AML/CFT regulations, conducted extensive outreach programs to educate about DNFBPs, established a dedicated IT-based DNFBP Management System, launched customized mobile App for registrations and screening purposes, carried out a large number of onsite inspections and imposed a wide range of penalties for non-compliance.

READ MORE: FATF removes Pakistan from grey list

Similarly, in the area of cash smuggling, FBR Customs has fortified cross-border controls and implemented a comprehensive mechanism to combat cash smuggling by all means possible.

Likewise, FBR has also undertaken a large number of money laundering investigations against the tax crimes and made significant confiscations in this regard.

FBR also dedicated one of its senior officers, Mohammad Iqbal, who has made significant contributions to completing the FATF action plans while on deputation for 3 years in NACTA and later supervised the tasks related to DNFBPs.

Asim Ahmad, Chairman FBR/ Secretary Revenue Division, has felicitated all the government organizations and their key personnel including the concerned officers of Inland Revenue Service and Pakistan Customs who have worked tirelessly for the exit from the FATF grey list.

The Chairman FBR reiterated FBR’s unflinching resolve and an unwavering commitment to continue implementing the anti-money laundering and combating financing terror regime in the areas supervised by FBR.

READ MORE: Pakistan set to exit FATF grey list

October 22, 2022
FBR notifies tax rates on prize bond, lottery winning during 2022-2023

Federal Board of Revenue (FBR) has notified rates of withholding tax on wining prize bonds and winnings raffle or lottery during 2022-2023.

The FBR issued the withholding tax card for tax year 2023 (July 01, 2022 to June 30, 2023) after amending the Income Tax Ordinance, 2001 through changes brought through Finance Act, 2022.

READ MORE: Tax rates for rental income from immovable property during 2022-2023

Following is the text of Section 156 related to tax on prizes and winnings:

156. Prizes and winnings.—(1) Every person paying prize on a prize bond, or winnings from a raffle, lottery, prize on winning a quiz, prize offered by companies for promotion of sale, or cross-word puzzle shall deduct tax from the gross amount paid at the rate specified in Division VI of Part III of the First Schedule.

READ MORE: FBR notifies withholding tax rates for exports during 2022-2023

(2) Where a prize, referred to in sub-section (1), is not in cash, the person while giving the prize shall collect tax on the fair market value of the prize.

(3) The tax deductible under sub-section (1) or collected under sub-section (2) shall be final tax on the income from prizes or winnings referred to in the said sub-sections.

The rate of withholding tax on prizes and winnings under Section 156:

READ MORE: Tax rates on payments for goods, services during 2022-2023

— The rate of withholding tax for prize bond or cross word puzzle is 15 per cent for persons on Active Taxpayers List (ATL) and 30 per cent for person not on the ATL.

— The rate of withholding tax for raffle, lottery, quiz, prize and sale promotion by a company is 20 per cent for person on the ATL and 40 per cent for person not on the ATL.

READ MORE: Tax rates on payments to non-residents during 2022-2023

READ MORE: Up to 70% income tax imposed on dividends for year 2022-2023

READ MORE: FBR updates salary tax card for year 2022-2023

READ MORE: FBR issues withholding tax rates on imports for tax year 2022-2023

READ MORE: Tax rates on profit from bank deposits during year 2022/2023

October 22, 2022

Tax rates for rental income from immovable property during 2022-2023

Federal Board of Revenue (FBR) has issued withholding tax rates for rental income from immovable properties during 2022-2023.

The FBR issued the withholding tax card for tax year 2023 (July 01, 2022 to June 30, 2023) after amending the Income Tax Ordinance, 2001 through changes brought through Finance Act, 2022.

Following is the text of Section 155 related to rental income from immovable property and rates of tax under this section:

Section 155: Rent of immoveable property.

(1) Every prescribed person making a payment in full or part (including a payment by way of advance) to any person on account of rent of immovable property (including rent of furniture and fixtures, and amounts for services relating to such property) shall deduct tax from the gross amount of rent paid at the rate specified in Division V of Part III of the First Schedule.

Explanation.- “gross amount of rent” includes the amount referred to in sub-section (1) or (3) of section 16, if any.

Explanation.— For removal of doubt, it is clarified that the sub section (1) shall apply when a payment is made on account of rent of immoveable property irrespective of head of income.

(3) In this section, “prescribed person” means –

(i) the Federal Government;

(ii) a Provincial Government;

(iii) Local Government;

(iv) a company;

(v) a non-profit organization or a charitable institution;

(vi) a diplomatic mission of a foreign state;

(via) a private educational institution, a boutique, a beauty parlour, a hospital, a clinic or a maternity home;

(vib) individuals or association of persons paying gross rent of rupees one and a half million and above in a year; or

(vii) any other person notified by the Board for the purpose of this section.

Following are the withholding tax rates on rental income from immovable properties applicable on individuals and Association of Persons (AOPs) and in case those are not on Active Taxpayers List (ATL):

Sr. No.	Gross amount of rent	Rate of tax	Not on ATL
1.	Where the gross amount of rent does not exceed Rs300,000	Nil	Nil
2.	Where the gross amount of rent does not exceed Rs600,000	5 per cent of the gross amount exceeding Rs300,000	100 per cent increase
3.	Where the gross amount of rent exceeds Rs600,000 but does not exceed Rs2,000,000	Rs15,000 plus 10 per cent of the gross amount exceeding Rs600,000	100 per cent increase
4.	Where the gross amount of rent exceed Rs2,000,000	Rs155,000 plus 25 per cent of the gross amount exceeding Rs2,000,000	100 per cent

The rate of withholding tax for rental income from immovable properties in case of companies is 15 per cent and in case of not on ATL the rate is 30 per cent.

October 20, 2022