Withholding tax rates on payment for goods and services during Tax Year 2019

KARACHI: Federal Board of Revenue (FBR) has updated withholding tax card for tax year 2019 amendment through Finance Supplementary (Second Amendment) Act, 2019.

Following are the withholding tax rates applicable on payment for goods and services under Section 153 of Income Tax Ordinance, 2001.

Under this section every withholding agent prescribed under the ordinance shall collect withholding tax from resident person, and permanent establishment in Pakistan of a non-resident at the time the amount is actually paid.

The withholding tax rates under Section 153(I)(a):

For sale of rice, cotton seed oil and edible oil the tax rate shall be 1.5 percent of gross amount.

Supply made by distributors of fast moving consumer goods shall be 2 percent of gross amount in case of company and 2.5 percent of gross amount in case of other than company.

For sale of any other goods:

(i) in the case of company the filer of income tax return shall pay 4 percent and the rate of withholding tax shall be 8 percent for non-filer.

(ii) In the case of other than companies the tax rate for filer shall be 4.5 percent and 9 percent for non-filer.

The FBR said that no deduction of tax where payment is less than Rs75,000 in aggregate during a financial year.

The withholding tax rate for transport services under Section 153(1)(b) shall be two percent.

All others under the section shall be:

(i) in the case of companies the filer shall pay 8 percent and 14.5 percent for non-filer.

(ii) in all other than company taxpayers the withholding tax shall be 10 percent for filer and 17.5 percent for non-filer.

(iii) Person making payment to electronic and print media for advertising services: filer shall pay 1.5 percent; non-filer shall pay 12 percent; and non-filer other than company shall pay 15 percent.

The FBR said that no deduction of tax where payment is less than Rs30,000 in aggregated during a financial year.

The rate of withholding tax on execution of contracts under Section 153(1)(c) shall be:

(i) in case of sportsperson the rate shall be 10 percent

(ii) in the case of companies the withholding tax rate for filers shall be 7 percent and 14 percent for non-filers.

(iii) In the case of other than companies the rte of withholding tax shall be 7.5 percent for filers and 15 percent for non-filers.

Every exporters or export house shall deduct tax on payments in respect of services of stitching, dying, printing etc. received or provided under Section 153(2) the withholding tax rate shall be one percent.

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