Salary persons should obtain withholding income tax deduction certificates to get refund/adjustment

KARACHI: Salary persons having above threshold income for tax year 2019 should obtain certificates of withholding tax in order to get refund / adjustment after filing annual income tax returns.

There are many provisions of withholding taxes under Income Tax Ordinance, 2001 where withholding agents deduct tax, which are adjustable against tax liability of taxpayers.

In those cases where salaried persons driving income less than threshold income are also required to file income tax returns to claim their refunds against tax deducted under withholding provisions.

For tax year 2019 the income tax return filing date is due on September 30, 2019 for salaried persons, business individuals and association of persons.

The salaried persons driving income above threshold income i.e. above Rs400,000 are required to file income tax return electronically.

For the tax year 2019, the total tax amount is Rs1,000 for full year where the taxable income exceeds Rs400,000 but does not exceed Rs800,000.

Similarly, the tax amount is Rs2,000 for full year where the taxable income exceeds Rs800,000 but does not exceed Rs1,200,000.

The FBR also prescribed tax rate for other slabs of income of salaried persons.

The FBR collect withholding tax through withholding tax agents from persons filing or not filing income tax returns. However, tax rates higher for persons those are not filing income tax returns. But in case a person is non-filer paid higher amount as withholding tax can claim refund or adjustment after filing income tax return for the tax year in which the deduction was made.

The FBR collects billions of rupees as adjustable withholding tax and it deposited in national kitty as taxpayers do not bother to claim.

A taxpayer can claim all those tax deduction, which are adjustable, but after filing annual income tax return.

A person can claim refund / adjustment on tax deducted under major provisions of Income Tax Ordinance, 2001:

Section 155: tax paid made on account of rent of immovable property.

Section 156B: tax paid on withdrawal of balance under pension fund.

Section 231A: tax paid on cash withdrawal from banks

Section 231B: advance tax paid on purchase or lease of motor vehicles.

Section 235A: tax paid on electricity consumption by domestic consumers

Section 236: advance tax paid to phone company or internet service provider

Section 236B: advance tax paid on purchase of domestic air ticket.

Section 236C: advance tax paid at the time of sale of immovable property.

Section 236D: advance tax paid on organizing function or gathering.

Section 236I: advance tax paid while paying fee to educational institutions.

Section 236K: advance tax paid on purchase of immovable property.

Section 236L: Advance tax on purchase of international air ticket.

Section 236P: Non-filer who paid tax on non-cash banking transactions can avail adjustment on filing income tax return.

Section 236R – advance tax paid on education related expenses remitted abroad.

Section 236U – advance tax on insurance premium

Section 236 Y – Advance tax on persons remitting amount abroad through payment of debit or credit card.

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