Withholding tax rates for brokerage, commission updated

ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding tax rates for brokerage and commission income for tax year 2021.

The FBR issued withholding tax card 2020-2021 incorporating amendment to Income Tax Ordinance, 2001 made through Finance Act, 2020.

Under Section 233 of Income Tax Ordinance, 2001 federal government, provincial government, local authority, company, association of persons (AOP) are required to collect/deduct withholding tax at the time the brokerage or commission is actually paid.

The deducted amount shall be minimum tax.

The withholding tax rates for brokerage and commission shall be:

In case of:

(i) advertising agents shall pay 10 percent and persons not on the Active Taxpayers List (ATL) shall be 20 percent.

(ii) life insurance agents where commission received is less than Rs0.5 million per annum the tax rate shall be 8 percent and for persons not appearing on the ATL the tax shall be 16 percent.

(iii) the persons not covered in 1 & 2 the tax rate shall be 12 percent and for persons not appearing on the ATL the tax shall be 24 percent.

Under Section 233AA of the ordinance the members stock exchange (margin financier & lenders) trading finance shall pay withholding tax.

The National Clearing Company of Pakistan Limited (NCCPL) will collect withholding tax at 10 percent of the mark-up or interest from the members stock exchange (margin financier & lenders) trading finance at the time of mark-up / interest is paid.

The tax is adjustable against total tax liability.

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