ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding tax rate on payment of educational fee for tax year 2021.
The FBR issued withholding tax card 2020-2021 (updated up to June 30, 2020) after incorporating amendment to Income Tax Ordinance, 2001 through Finance Act, 2020.
Under Section 236I of Income Tax Ordinance, 2001, every person preparing fee voucher or challan shall collect/deduct withholding tax from the person depositing/paying fee at the time of payment of fee. The tax paid as withholding tax is adjustable against payable tax liability.
Every Educational institution has to collect advance tax on the amount of fee (inclusive of tuition fee & all charges received by the educational institution, by whatever name called, excluding the amount which is refundable) exceeding Rs. 200,000 per annum ( other than an amount paid by way of scholarship) at the rate of five percent from the persons not appearing in the Active Taxpayers List (ATL).
Through Finance Act, 2020 the persons filing income tax returns and are on the ATL are no more require to pay advance tax at the time of paying educational fee.