Tag: withholding tax card 2022-2023

Withholding tax rates on immovable property transactions during 2022-2023

Federal Board of Revenue (FBR) has issued withholding tax rates on sale and purchase of immovable properties during the year 2022-2023.

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

Tax authorities collect withholding tax on sale of immovable property under Section 236C and on purchase of immovable property under Section 236K of Income Tax Ordinance, 2001.

READ MORE: FBR issues tax rates on property sale through auction during 2022-2023

Following are the withholding tax rates on immovable property transactions and text of relevant sections under Income Tax Ordinance, 2001:

WITHHOLIDNG TAX RATE ON SALE OF IMMOVABLE PROPERTY:

The withholding tax rate is 2 per cent of gross amount of consideration received on sale of immovable property by persons who are on the Active Taxpayers List (ATL) under Section 236 C of Income Tax Ordinance, 2001. However, the rate shall be enhanced by 100 per cent to 4 per cent for persons not on the ATL.

Section 236C. Advance Tax on sale or transfer of immovable Property

(1) Any person responsible for registering, recording or attesting transfer of any immovable property shall at the time of registering, recording or attesting the transfer shall collect from the seller or transferor advance tax at the rate specified in Division X of Part IV of the First Schedule:

Explanation,—For removal of doubt, it is clarified that the person responsible for registering, recording or attesting transfer includes person responsible for registering, recording or attesting transfer for local authority, housing authority, housing society, co-operative society, public and private real estate projects registered/governed under any law, joint ventures, private commercial concerns and registrar of properties.

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

Provided that this sub-section shall not apply to a seller, being the dependant of a Shaheed belonging to Pakistan Armed Forces or a person who dies while in the service of the Pakistan Armed Forces or the service of Federal or Provincial Government, in respect of first sale of immovable property acquired from or allotted by the Federal Government or Provincial Government or any authority duly certified by the official allotment authority, and the property acquired or allotted is in recognition of or for services rendered by the Shaheed or the person who dies in service:

Provided further that if the seller or transferor is a non-resident individual holding Pakistan Origin Card (POC) or National ID Card for Overseas Pakistanis (NICOP) or Computerized National ID Card (CNIC) who had acquired the said immovable property through a Foreign Currency Value Account (FCVA) or NRP Rupee Value Account (NRVA) maintained with authorized banks in Pakistan under the foreign exchange regulations issued by the State Bank of Pakistan, the tax collected under this section from such persons shall be final discharge of tax liability in lieu of capital gains taxable under section 37 earned by the seller or transferor from the property so disposed of.

(2) The Advance tax collected under sub-section (1) shall be adjustable

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

Provided that where immovable property referred to in sub-section (1) is acquired and disposed of within the same tax year, the tax collected under this section shall be minimum tax.

(4) Sub-section (1) shall not apply to:—

(a) a seller, if the seller is dependent of:

(i) a seller, if the seller is dependent of:

a Shaheed belonging to Pakistan Armed Forces; or

(ii) a person who dies while in the service of the Pakistan Armed Forces or the Federal and Provincial Governments; and

(b) to the first sale of immovable property which has been acquired or allotted as an original allottee, duly certified by the official allotment authority.

WITHHOLDING TAX RATE ON PURCHASE OF IMMOVABLE PROPERTY:

The withholding tax rate on purchase of immovable property is two per cent on persons on the ATL under Section 236K of the Income Tax Ordinance, 2001. However, this rate shall be increased by 250 per cent to 7 per cent for persons not on the ATL.

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

Section 236K. Advance tax on purchase or transfer of immovable property

(1) Any person responsible for registering, recording or attesting transfer of any immovable property shall at the time of registering, recording or attesting the transfer shall collect from the purchaser or transferee advance tax at the rate specified in Division XVIII of Part IV of the First Schedule.

Explanation,—For removal of doubt, it is clarified that the person responsible for registering, recording or attesting transfer includes person responsible for registering, recording or attesting transfer for local authority, housing authority, housing society, co-operative society, public and private real estate projects registered/governed under any law, joint ventures, private commercial concerns and registrar of properties.

(2) The advance tax collected under sub-section (1) shall be adjustable:

Provided that if the buyer or transferee is a non-resident individual holding a Pakistan Origin Card (POC) or National ID Card for Overseas Pakistanis (NICOP) or Computerized National ID Card (CNIC) who has acquired the said immovable property through a Foreign Currency Value Account (FCVA) or NRP Rupee Value Account (NRVA) maintained with authorized banks in Pakistan under the foreign exchange regulations issued by the State Bank of Pakistan, the tax collected under this section from such persons shall be final discharge of tax liability for such buyer or transferee.

(3) Any person responsible for collecting payments in installments for purchase or allotment of any immovable property where the transfer is to be effected after making payment of all installments, shall at the time of collecting installments collect from the allotee or transferee advance tax at the rate specified in Division XVIII of Part IV of the First Schedule:

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

Provided that where tax has been collected along with installments, no further tax under this section shall be collected at the time of transfer of property in the name of buyer from whom tax has been collected in installments which is equal to the amount payable in this section.

(4) Nothing contained in this section shall apply to a scheme introduced by the Federal Government, or Provincial Government or an Authority established under a Federal or Provincial law for expatriate Pakistanis:

Provided that the mode of payment by the expatriate Pakistanis in the said scheme or schemes shall be in the foreign exchange remitted from outside Pakistan through normal banking channels.

October 31, 2022
FBR issues tax rates on property sale through auction during 2022-2023

Federal Board of Revenue (FBR) has notified withholding tax rates for sale of property through public auction during year 2022-2023.

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

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

The revenue body collect withholding tax on sale of property through public auction under Section 236A of the ordinance.

Following are the tax rates and text of the Section 236A.

WITHHOLDING TAX RATES:

— Any property or good other than immovable property, the tax rate is 10 per cent of gross sale price and the rate is 20 per cent for persons not on the Active Taxpayers List (ATL).

— In case of immovable property, the tax rate is 5 per cent of gross sale price and the tax rate is 10 per cent in case persons are not on the ATL.

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

Section 236A: Advance tax at the time of sale by auction.

(1) Any person making sale by public auction or auction by a tender, of any property or goods (including property or goods confiscated or attached) either belonging to or not belonging to the Government, local Government, any authority, a company, a foreign association declared to be a company under sub-clause (vi) of clause (b) of sub-section (2) of section 80, or a foreign contractor or a consultant or a consortium or Collector of Customs or Commissioner of Inland Revenue or any other authority, shall collect advance tax, computed on the basis of sale price of such property and at the rate specified in Division VIII of Part IV of the First Schedule, from the person to whom such property or goods are being sold.

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

Explanation.— For the removal of doubt it is clarified for the purpose of this section that—

(a) the expression “sale by public auction or auction by a tender” includes renewal of a license previously sold by public auction or auction by a tender; and

(b) where payment is received in instalments, advance tax is to be collected with each instalment.

(2) The credit for the tax collected under sub-section (1) in that tax year shall, subject to the provisions of section 147, be given in computing the tax payable by the person purchasing such property in the relevant tax year or in the case of a taxpayer to whom section 98B or section 145 applies, the tax year, in which the “said date” as referred to in that section, falls or whichever is later.

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

Explanation.- For the purposes of this section, sale of any property includes the awarding of any lease to any person, including a lease of the right to collect tolls, fees or other levies, by whatever name called.

(3) Notwithstanding the provisions of sub-section (2), tax collected on a lease of the right to collect tolls shall be final tax.

October 27, 2022
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.

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(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
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.

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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.

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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 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

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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

FBR notifies withholding tax rates for exports during 2022-2023

Federal Board of Revenue (FBR) has notified rates of withholding tax for exports and export of services made during the year 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 154 related to exports and export of services and rates of withholding tax (in bold):

154. Exports. — (1) Every authorised dealer in foreign exchange shall, at the time of realisation of foreign exchange proceeds on account of the export of goods by an exporter, deduct tax from the proceeds at the rate specified in Division IV of Part III of the First Schedule.

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

The withholding tax rates on export is one per cent under Section 154(1).

(3) Every banking company shall, at the time of realisation of the proceeds on account of a sale of goods to an exporter under an inland back-to-back letter of credit or any other arrangement as prescribed by the Board, deduct tax from the amount of the proceeds at the rate specified in Division IV of Part III of the First Schedule.

(3A) The Export Processing Zone Authority established under the Export Processing Zone Authority Ordinance, 1980 (VI of 1980), shall at the time of export of goods by an industrial undertaking located in the areas declared by the Federal Government to be a Zone within the meaning of the aforesaid Ordinance, collect tax at the rate specified in Division IV of Part III of the First Schedule.

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

(3B) Every direct exporter and an export house registered under the Duty and Tax Remission for Exports Rules, 2001 provided in Sub-Chapter 7 of Chapter XII of the Customs Rules, 2001 shall, at the time of making payment for a firm contract to an indirect exporter defined under the said rules, deduct tax at the rates specified in Division IV of Part III of the First Schedule.

(3C) The Collector of Customs at the time of clearing of goods exported shall collect tax from the gross value of such goods at the rate specified in Division IV of Part III of the First Schedule.

The rate of withholding tax is 1 per cent under Sections 154(3A), 154(3B) and 154(3C).

(4) The tax deductible under this section shall be a final tax on the income arising from the transactions referred to in this section.

“(5) The provisions of sub-section (4) shall not apply to a person who opts not to be subject to final taxation:

Provided that this sub-section shall be applicable from tax year 2015 and the option shall be exercised every year at the time of filing of return under section 114:

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Provided further that the tax deducted under this sub-section shall be minimum tax.”

154A. Export of Services.— (1) Every authorized dealer in foreign exchange shall, at the time of realization of foreign exchange proceeds on account of the following, deduct tax from the proceeds at the rates specified in Division IVA of Part III of the First Schedule –

The withholding tax is 0.25 per cent for export proceeds of computer software, IT Services or IT Enabled services by persons registered with Pakistan Export Board under Section 154A.

The withholding tax rate in any other case is 1 per cent.

(a) exports of computer software or IT services or IT enabled services where the exporter is registered with and duly certified by the Pakistan Software Export Board (PSEB).;

(b) services or technical services rendered outside Pakistan or exported from Pakistan;

(c) royalty, commission or fees derived by a resident company from a foreign enterprise in consideration for the use outside Pakistan of any patent, invention, model, design, secret process or formula or similar property right, or information concerning industrial, commercial or scientific knowledge, experience or skill made available or provided to such enterprise;

(d) construction contracts executed outside Pakistan:

(da) foreign commission due to an indenting commission agent;

(e) other services rendered outside Pakistan as notified by the Board from time to time;

(2) The tax deductible under this section shall be a final tax on the income arising from the transactions referred to in this section, upon fulfilment of the following conditions –

(a) return has been filed;

(b) withholding tax statements for the relevant tax year have been filed if required under the Ordinance; and

(b) sales tax returns under Federal or Provincial laws have been filed, if required under the law;

(d) no credit for foreign taxes paid shall be allowed.

(3) The provisions of sub-section (2) shall not apply to a person who does not fulfill the specified conditions or who opts not to be subject to final taxation:

Provided that the option shall be exercised every year at the time of filing of return under section 114.

(5) The Board in consultation with State Bank of Pakistan shall prescribe mode, manner and procedure of payment of tax under this section.

(6) The Board shall have power to include or exclude certain services for applicability of provisions of this section.

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October 19, 2022