FBR requires withholding agents to provide tax deduction certificates and payment receipts to taxpayers, while return filers must attach the relevant receipts to their income tax returns.
ISLAMABAD: The Federal Board of Revenue (FBR) has made it mandatory for withholding agents to provide certificates and payment receipts to persons from whom tax is collected or deducted during tax year 2027 under Section 164 of the Income Tax Ordinance, 2001.
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According to the Income Tax Ordinance, 2001, updated up to June 30, 2026, tax year 2027 runs from July 1, 2026, to June 30, 2027. Section 164 sets out the documentation requirements for tax collected or deducted at source and establishes corresponding obligations for taxpayers filing income tax returns.
Withholding agents required to issue tax certificates
Under Section 164(1), every person collecting tax under Division II, deducting tax from a payment under Division III, or collecting or deducting tax under Chapter XII must provide the relevant documentation to the affected taxpayer.
The withholding agent must furnish the documents at the time of collecting or deducting the tax.
The required documentation includes:
• Copies of the Computerised Payment Receipt (CPR) or any equivalent document.
• A certificate specifying the amount of tax collected or deducted.
• Other particulars prescribed under the applicable rules.
The certificate must be provided to the person from whom tax has been collected or to the recipient of the payment from which tax has been deducted.
The requirement ensures that taxpayers receive documentary evidence of tax withheld on their behalf and can use the information when preparing their income tax returns.
Special provision for SWAPS agents
Section 164 also contains a specific provision for persons or classes of persons notified as SWAPS agents.
In these cases, the SWAPS Payment Receipt (SPR) replaces the Computerised Payment Receipt (CPR), as prescribed by the law.
The provision establishes the applicable documentation requirements for notified SWAPS agents while maintaining the obligation to provide evidence of tax collection or deduction.
Taxpayers must attach payment receipts to income tax returns
Section 164(2) places a separate obligation on persons required to file a return of taxable income for a tax year.
Such taxpayers must attach copies of the CPR or SWAPS Payment Receipt (SPR), as applicable, to their income tax returns. These must be the receipts on the basis of which the withholding tax certificate was provided for tax collected or deducted during the relevant tax year.
Consequently, taxpayers required to file returns should retain the relevant payment receipts and ensure that the supporting documentation corresponds to the withholding tax certificates they receive.
The provision links the certificate issued by the withholding agent with the payment evidence submitted by the taxpayer as part of the return-filing process.
Importance of withholding tax certificates in tax year 2027
Section 164 establishes documentation responsibilities for both withholding agents and taxpayers.
Withholding agents must issue the prescribed certificates and payment receipts when collecting or deducting tax. Meanwhile, taxpayers required to file returns must attach the relevant payment receipts to their returns for the year concerned.
For tax year 2027, businesses, employers and other persons responsible for withholding tax should ensure that certificates are issued at the time of deduction or collection and that the supporting receipts are available.
Taxpayers should also maintain complete records of tax deducted or collected on their behalf to support their income tax return filings and demonstrate the amounts paid towards their tax liabilities.
Compliance with Section 164 helps maintain documentary evidence of withholding tax transactions and supports accurate reporting under the Income Tax Ordinance, 2001.
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