Witholding of taxes

WITHHOLDING TAX
(COLLECTION AND DEDUCTION OF TAX AT SOURCE)
Under the Income Tax Ordinance, 2001 and Sales Tax Act, 1990
Presented By:
Muhammad Abdullah Yusuf, FCA
Habib Fakhruddin, FCA

2
In the Name of Allah, the Most Beneficent, the Most Merciful

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IN THIS PRESENTATION
Different colors have been used which means
These words have special meaning as defined in the Income Tax
Ordinance, 2001 or Sales Tax Act, 1990.
Additions or substitutions made through Finance Act, 2014
Deletions or omission made through Finance Act, 2014

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WITHHOLDING INCOME TAX
1st Session
Definitions – Relevant for today's workshop
Section wise under standing of:
 Persons responsible - Withholding Tax Agents
 Persons/transactions attracting withholding tax
 Standard rates of withholding tax
 Reduced rates of withholding tax
 Value/amount on which withholding tax apply
 Time of collection or deduction
 Credit for tax withheld (Treatment)
 Exceptions/exclusions
 Related Q & A

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DEFINITIONS
PRINT OUT SEPARATELY PROVIDED
“Association of persons”
“Banking company”
“Company”
“Employee”, “Employer” and “Employment”
“Filer” and “Non-filer”
“Industrial undertaking”
“Permanent establishment”
“Person”
“Profit on debt” and “Debt”
“Public Company”
“Resident” and “Non-resident”
“Salary”
“Tax year”
“Turnover”

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COLLECTION AND DEDUCTION OF TAX AT SOURCE
– Sections 148 to 158
• Imports (Section 148);
• Salary (Section 149);
• Dividends (Section 150);
• Profit on debt (Section 151);
• Payment to non-residents (Section 152);
• Payment for goods and services (Section 153);
• Exports (Section 154);
• Income from property (Section 155);
• Prizes and winnings (Section 156);
• Petroleum products (Section 156A);
• Withdrawal from pension fund (Section 156B); and
• Time of deduction of tax (Section 158);

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IMPORT OF GOODS
Section 148
Continued
Person(s) liable
to collect tax
Collector of Customs
From whom Importer of goods
Rates of tax
collection:
2015 2014
1. Industrial undertaking
importing remeltable steel (PCT
Heading 72.04) and directly
reduced iron for its own use
1.00% 1.00%
2. Persons importing potassic
fertilizers in pursuance of
Economic Coordination
Committee of the cabinet’s
decision No. ECC-155/12/2004
dated the 9th December, 2004
1.00% 1.00%
3. Persons importing urea 1.00% 1.00%

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IMPORT OF GOODS
Section 148
Continued
Rates of tax
collection:
2015 2014
4. Manufacturers covered under
Notification No. S.R.O.
1125(I)/2011 dated the 31st
December, 2011
1.00% 1.00%
5. Persons importing pulses 2.00% 2.00%
6. Commercial importers covered
under Notification No. S.R.O.
1125(I)/2011 dated the 31st
December, 2011
3.00% 3.00%
7. Ship breakers on import of ships 4.50% *
8. Industrial undertakings not
covered under S. Nos. 1 to 7
5.50% 5.00%
* Not separately provided

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IMPORT OF GOODS
Section 148
Continued
Rates of tax
collection:
2015 2014
9. Companies not covered under
S. Nos. 1 to 8
5.50% 5.00%
10.Persons not covered under S.
Nos. 1 to 9
6.00% 5.50%
11.Import of foreign produced film
for the purposes of screening
and viewing
* 12%
On Value of goods as determined under section 25 of the
Customs Act, 1969, as if the goods were subject to
advalorem duty increased by the Customs Duty, Sales
Tax and Federal Excise Duty, if any, payable in respect
of the import of the goods
* Not separately provided

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IMPORT OF GOODS
Section 148
When At the same time and manner as the customs duty is
payable in respect of the goods imported
Additional
material
separately
provided
• Clarifications
Continued

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IMPORT OF GOODS
Section 148
Treatment Nature
Raw material, excluding edible oil and packing material,
imported by an industrial undertaking for its own use
Adjustable
Edible oil and packing material (as raw material), imported by
manufacturers of vegetable oil or ghee or both for its own use
Adjustable/
Minimum
Plant, machinery, equipment and parts imported by an
industrial undertaking for its own use
Adjustable
Fertilizer imported by manufacturer of fertilizer Adjustable
Motor vehicles in CBU (completely build up unit) condition
imported by manufacturer of motor vehicles
Adjustable
Any goods by large import houses Adjustable
Foreign produced film imported for the purposes of screening
and viewing
Adjustable
Foreign produced TV plays and serials Adjustable
Import of ships by ship breakers Final
All other goods Final /
Adjustable*

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SALARY
Section 149
Person(s) liable
to deduct tax
Person responsible for paying salary
From whom Employee
Rates of tax
deduction
1. On salary excluding specified allowances
chargeable as a separate block of income and
Annual Average Rate (to be calculated as per
Rate Card as reduced by applicable Reduction in
Tax Liability) after making adjustment for:
a. any other adjustable tax collected or deducted
at source (which is not a final tax) from
employee during the tax year;
b. tax credit admissible under section 61, 62, 63
and 64 during the tax year;
c. any excess deduction or deficiency arising out
of any previous deduction; or
d. failure to make deduction during the year
Continued

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SALARY
Section 149
Rates of tax
deduction
Note: The adjustments at (a), (b) and (c)
above can be made on submission of
declaration by the employee in the
prescribed form.
2. On Transport Monetization for Civil Servants (after
deduction of driver's salary) [Clause (27) of Part II
of 2nd Schedule]
5.00%
3. On flying allowance, not exceeding basic salary,
paid to the pilots, flight engineers, navigators of
Pakistan Armed Forces, Pakistani Airlines or Civil
Aviation Authority, Junior Commissioned Officers or
other ranks of Pakistan Armed Forces [Clause (1)
of Part III of 2nd Schedule]
2.50%
Continued

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SALARY
Section 149
Rates of tax
deduction
4. On submarine allowance, not exceeding basic
salary, paid to the officers of the Pakistan Navy
[Clause (1) of Part III of 2nd Schedule]
2.50%
5. On all allowances, in excess of the basic pay, paid
to the pilots of Pakistani airlines [Clause (1AA) of
Part III of 2nd Schedule]
7.50%
6. On Directorship fee or fee for attending board
meeting
20.00%
On Salary / allowances etc. chargeable to tax
When At the time the salary is actually paid
Continued

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SALARY
Section 149
Treatment
1. On Salary excluding following Adjustable
2. On Flying/submarine allowance of specified
persons
Separate block/fixed
3. On all allowances of pilots of Pakistani airlines Separate block/fixed
4. On Transport Monetization for Civil Servants Separate block/fixed
5. On Retirement/termination benefits (if opted) Separate block/fixed
6. On Arrears of salary (if opted) Separate block/fixed
Continued

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SALARY
Section 149
Rate Card for calculating gross income tax on the taxable income from
salary, excluding specified allowance etc. is as under:
Taxable income
between
Rate of tax
(No Change as compared to tax year 2014)
Rs. 1 and
Rs. 400,000
00.00%
Rs. 400,001 and
Rs. 750,0000
5% of the amount exceeding Rs. 400,000
Rs. 750,001 and
Rs.1,400,000
Rs. 17,500 plus 10% of the amount exceeding Rs.
750,000
Rs.1,400,001 and
Rs.1,500,000
Rs. 82,500 plus 12.50% of the amount exceeding
Rs. 1,400,000
Rs.1,500,001 and
Rs.1,800,000
Rs. 95,000 plus 15% of the amount exceeding Rs.
1,500,000
Continued

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SALARY
Section 149
Rs.1,800,001 and
Rs.2,500,000
Rs. 140,000 plus 17.50% of the amount
exceeding Rs. 1,800,000
Rs.2,500,001 and
Rs.3,000,000
Rs. 262,500 plus 20% of the amount
Rs.3,000,001 and
Rs.3,500,000
Rs.3,500,001 and
Rs.4,000,000
Rs. 475,000 plus 25% of the amount
Rs.4,000,001 and
Rs.7,000,000
Rs.7,000,001 and
above
Rs. 1,425,000 plus 30% of the amount
Continued

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SALARY
Section 149
Following additional material is separately provided
• Reduction in tax liability
• Annual average
• Change in salary during the tax year
• Change of employer during the tax year
• Retirement or termination benefits
• Arrears of salary
• Clarifications

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DIVIDEND
Section 150
Person(s) liable
to deduct tax
Person
From whom Recipients of dividend
Rates of tax
deduction
See Next Slide
On Gross amount of dividend
When At the time the dividend is actually paid
Treatment Separate charge/final
Continued

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DIVIDEND
Section 150
Dividend received from: 2015 2014
Rate of deduction Rate of
final tax
Rate
deduction
/ final tax
Filer Non-filer No
distinction
Power project privatized by
WAPDA
7.50% 7.50% 7.50% 7.50%
Company set up for power
generation
7.50% 7.50% 7.50% 7.50%
Company supplying coal
exclusively to power generation
projects
7.50% 7.50% 7.50% 10.00%
Other companies excluding
Collective investment scheme or a
mutual fund
10.00% 15.00% 10.00% 10.00%
Treatment of excess deduction from non-filer?
Continued

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DIVIDEND
Section 150
Dividend received from: 2015 2014
Rate of deduction Rate of
final tax
Rate
deduction
/ final tax
Filer Non-filer No distinction
Collective investment scheme or a mutual fund:
 Stock Fund (if dividend receipts
of the fund are less than capital
gains)
12.50% 12.50% 12.50% 10.00%
 Stock Fund (if dividend receipts
of the fund are more than capital
gains)
10.00% 10.00% 10.00% 10.00%
 Money market Fund, Income
Fund or any other fund:
o Received by an individual
or an AOP
10.00% 10.00% 10.00% 10.00%
o Received by a company 25.00% 25.00% 25.00% 10.00%

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PROFIT ON DEBT
Section 151(1)(a)
Person(s) liable
to deduct tax
Person
From whom Resident recipient of yield (Profit on debt)
Rate (Filer) 10.00%
Rate (Non-Filer) 10.00% where the profit on debt is upto Rs. 500,000
15.00% where the profit on debt exceeds Rs. 500,000
On Yield (profit on debt) on an account, deposit or a
certificate (excluding Behbood/Pensioner) under the
National Savings Scheme or Post Office Savings
Account as reduced by amount of Zakat, if any, paid by
the recipient under the Zakat and Ushr Ordinance, 1980
When At the time the yield (profit on debt) is credited to the
account of the recipient or is actually paid, whichever is
earlier
Treatment Individual or association of persons Final @ 10% *
Company Adjustable
* Irrespective of being filer or non-filer and the excess deduction from
non-filer is adjustable tax

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PROFIT ON DEBT
Section 151(1)(b)
Person(s) liable
to deduct tax
• Banking Company;
• Financial Institution
From whom Resident recipient of profit on debt on an account or
deposit
Rate (Filer) 10.00%
On Profit on debt on an account or deposit maintained
with the person(s) liable to deduct tax as reduced by
amount of Zakat, if any, paid by the recipient under the
Zakat and Ushr Ordinance, 1980
When At the time the profit on debt is credited to the account
of the recipient or is actually paid, whichever is earlier
Company Adjustable

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PROFIT ON DEBT
Section 151(1)(c)
Person(s) liable
to deduct tax
• Federal Government;
• Provincial Government;
• Local Government
From whom Resident recipient of profit (profit on debt) on any
security
Rate (Filer) 10.00%
On Profit on debt on any security (other than an account,
deposit or certificate under the National Savings
Schemes or Post Office Account) issued by the
person(s) liable to deduct tax as reduced by amount of
Zakat, if any, paid by the recipient under the Zakat and
Ushr Ordinance, 1980
Continued

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PROFIT ON DEBT
Section 151(1)(c)
Company Adjustable

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PROFIT ON DEBT
Section 151(1)(d)
Person(s) liable
to deduct tax
• Financial Institution
• Company as defined in the Companies Ordinance,
1984
• Body Corporate formed by or under any law in force
in Pakistan
• Finance Society
From whom Resident recipient of profit on debt
Rate (Filer) 10.00%
On Profit on debt on any bond, certificate, debenture,
security or instrument of any kind issued by the
person(s) liable to deduct tax as reduced by amount of
Zakat, if any, paid by
Continued

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PROFIT ON DEBT
Section 151(1)(d)
On the recipient under the Zakat and Ushr Ordinance, 1980
at the time the profit is paid
Company Adjustable
* Irrespective of being filer or non-filer and the excess deduction from non-
filer is adjustable tax

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NON-RESIDENT – ROYALTY or FEE FOR
TECHNICAL SERVICES – Section 152(1)
Person(s) liable
to deduct tax
Person
From whom Non-Resident Person
Rate of tax
deduction
15.00% or lower rate as per agreement for avoidance of
double taxation
On Gross amount of royalty or fee for technical services
chargeable to tax under section 6 (*)
When At the time the royalty or fee for technical services is
actually paid
Treatment Separate charge/Final
Continued

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NON-RESIDENT – ROYALTY or FEE FOR
TECHNICAL SERVICES – Section 152(1)
* If the property or right giving rise to the royalty is effectively
connected with a permanent establishment in Pakistan of the non-
resident; or the services giving rise to fee for technical services is
rendered through a permanent establishment in Pakistan of the
non-resident, then such royalty and fee for technical services is
not chargeable under section 6. Such royalty and fee for technical
services for the purposes of deduction of tax at source falls under
section 152(2)

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NON-RESIDENT – EXECUTION OF
CONTRACTS ETC. – Section 152(1A)
Person(s) liable
to deduct tax
Person
Rate of tax
deduction
double taxation
On Gross amount of the payment (including an advance) on
account of:
(a) A contract or sub-contract under a construction,
assembly or installation project in Pakistan,
including a contract for the supply of supervisory
activities in relation to such project;
(b) Any other contract for construction or services
rendered relating thereto
(c) A contract for advertisement services rendered
by T. V. Satellite Channels
Continued

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NON-RESIDENT – EXECUTION OF
CONTRACTS ETC. – Section 152(1A)
When At the time the amount is actually paid
Treatment If opted out of final tax regime Adjustable
Otherwise Final

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NON-RESIDENT – INSURANCE AND RE-
INSURANCE PREMIUM – Section 152(1AA)
Person(s) liable
to deduct tax
Person
Rate of tax
deduction
double taxation
On Gross amount of the insurance premium or re-
insurance premium, excluding payments made to a
permanent establishment in Pakistan of a non-
resident with the written approval of Commissioner
Treatment Final

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NON-RESIDENT – MEDIA PERSONS
Section 152(1AAA)
Person(s) liable
to deduct tax
Person
From whom Non-Resident Person relaying from outside Pakistan
Rate of tax
deduction
10.00%
On Gross amount paid for advertising services relayed from
out-side Pakistan
Treatment Final

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NON-RESIDENT – OTHER PAYMENTS
Section 152(2)
Person(s) liable
to deduct tax
Person
Rate of tax
deduction
double taxation
Reduced rate 10.00% - On profit on debt payable to a non-
resident person not having a
permanent establishment in Pakistan
[Clause (5A) of Part II of 2nd Schedule]
On Gross amount of any payment including profit on debt,
but excluding (*):
Continued

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Section 152(2)
Treatment Profit on debt, derived by a non-resident
not having a permanent establishment in
Pakistan, on debt instruments,
Government securities including treasury
bills and Pakistan Investment Bonds where
the investments are exclusively made
through a Special Rupee Convertible
Account maintained with a Bank in
Pakistan
Final
Other payments Adjustable
* Exclusions • Payments which are specifically covered under
other withholding tax provisions;
• Any payment that is taxable in the hands of a
permanent establishment in Pakistan of the
non-resident, with the written approval of the
Commissioner [Section 152(3)(b)]
Continued

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Section 152(2)
* Exclusions • Any payment that is paid by a person who is liable
to pay tax thereon as a representative of the non-
resident under section 172(3) provided a
declaration to this effect is filed with the
Commissioner prior to making the payment.
[Sections 152(3)(c) and 152(4)]
• Any payment that is not chargeable to tax
(conditions and restrictions apply) [Sections
152(3)(d)]
• Exclusions which are specifically covered under other withholding
tax provisions
• Conditions and restrictions applicable on any payment that is not
chargeable to tax

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NON-RESIDENT – SALE OF GOODS, SERVICES AND
EXECUTION OF CONTRACTS – Section 152(2A)
Person(s) liable
to deduct tax
• Company;
• Association of Persons constituted by, or under,
law;
• Non-profit organization
• Foreign Contractor or Consultant;
• Consortium or Joint Venture;
• Association of Persons having turnover of fifty
million rupees or more in the tax year 2007 or in
any subsequent tax year;
• An Individual having turnover of fifty million rupees
or more in the tax year 2009 or in any subsequent
tax year; or
• A person registered under the Sales Tax Act, 1990
From whom Permanent establishment in Pakistan of a non-
resident person
Continued

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NON-RESIDENT – SALE OF GOODS, SERVICES AND
EXECUTION OF CONTRACTS – Section 152(2A)
Rates of tax
deduction
03.50% - Sale of goods
02.00% - Transport services
06.00% - Other services rendered or provided
06.00% - Execution of contact
On Gross amount of payment on account of:
a. Sale of goods inclusive of sales tax payable, if
any,;
b. Rendering of or providing of services inclusive of
sales tax payable, if any,; and
c. Execution of a contract inclusive of sales tax
payable, if any, other than a contract for the sale of
goods or the rendering of or providing of services;
Treatment Adjustable

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SALE OF GOODS/SERVICES/EXECUTION OF
CONTRACTS – Section 153(1)
Person(s) liable
to deduct tax
• Company;
• Association of Persons constituted by, or under,
law;
• Non-profit organization
• Foreign Contractor or Consultant;
• Consortium or Joint Venture;
• Association of Persons having turnover of fifty
any subsequent tax year;
• An Individual having turnover of fifty million rupees
or more in the tax year 2009 or in any subsequent
tax year; or
• A person registered under the Sales Tax Act, 1990
From whom Resident person
Continued

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Continued
Rates of tax deduction:
On account of: 2015 2014
Sale of rice, cotton seed or edible oils 1.50% 1.50%
Sale of other goods by:
 A company 4.00% 3.50%
 Other than a company 4.50% 4.00%
Transport services 2.00% 2.00%
Other services provided or rendered by:
 A company 8.00% 6.00%
Execution of Contract by:
 A company 7.00% 6.00%
 A sportsperson * Not separately provided 10.00% *

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Reduced rates 01.00% - Sale of rice by Rice Exporters Association of
Pakistan to Utility Store Corporation, in
accordance with the provisions of the
agreement, signed with Ministry of Food,
Agriculture and Livestock on May 5, 2008
[Clause (13HH) of Part II of 2nd Schedule]
01.00% - Distributors of cigarette and pharmaceutical
products [Clause (24A) of Part II of 2nd
Schedule]
01.00% - Large distribution house who fulfill all the
conditions for a large import house as laid
down under section 148(7)(d), for large
import houses [Clause (24A) of Part II of 2nd
Schedule]
01.00% - Local sale of steel scrap to steel melters who
have opted under Sales Tax Special
Procedures and are compliantly filing returns
under the said scheme [Clause (12) of Part
IV of 2nd Schedule] Continued

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Reduced rate 01.00% - Local sale, supplies and services provided or
rendered to the following categories of Sales
Tax Zero Rated taxpayers registered on or
before June 30, 2011, namely:
a. Textile and articles thereof;
b. Carpets;
c. Leather and articles thereof including
artificial leather footwear;
d. Surgical goods; and
e. Sports goods
[Clause (45A) of Part IV of 2nd Schedule]
As may be directed by the Commissioner on
case to case basis [Section 153(4)]
On Gross amount of payment on account of:
a. Sale of goods inclusive of sales tax payable, if any,
(‘Sale of goods’ includes sale of goods for cash or
on credit, whether under written contract or not) ;
Continued

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On b. Rendering of or providing of services inclusive of
sales tax payable, if any, (‘Services’ includes the
services of accountants, architects, dentists, doctors,
engineers, interior decorators and lawyers, otherwise
than as an employee); and
c. Execution of a contract inclusive of sales tax
payable, if any, other than a contract for the sale of
goods or the rendering of or providing of services;
Excluding the following:
a. Payment for goods, services and execution of
contracts made to persons to whom the
Commissioner, by an order in writing directs to make
the payment without deduction of tax. [Section
153(4)]
Continued

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On Excluding the following:
b. Sale of goods by an importer of goods who has paid
tax at the time of import of such goods under section
148 and the goods are sold in the same condition as
they were when imported. [Section 153(5)(a) and
Clause (47A) of Part IV of 2nd Schedule]
c. Payments made to traders of yarn by the taxpayers
specified in the zero-rated regime of sales tax (as
provided under clause (45A) of Part-IV of the
Second Schedule) [Section 153(5)(b)]
d. Refund of any security deposit [Section 153(5)(c)]
e. Payment for execution of contracts representing the
cost of construction materials supplied to the
contractor by the Federal, Provincial or Local
Government [Section 153(5)(d)]
Continued

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On Excluding the following:
f. Payment for sale of goods made to a cotton ginner
who deposits in the Government Treasury, an
amount equal to the amount of tax deductible on the
payment being made to him, and evidence to this
effect is provided to the withholding agent [Section
153(5)(e)]
g. Payment for sale goods (purchase of an asset under
a lease and buy back agreement) by a modaraba,
leasing company, banking company or financial
institution. [Section 153(5)(f)]
h. Any payment for securitization of receivables by a
Special Purpose Vehicle to the Originator [Section
153(5)(g)]
Continued

46
Treatment Sale of goods
By a public company listed on a
stock exchange
Adjustable
By a company being manufacturer
of such goods, other than ginned
cotton
Adjustable
By manufacturer of iron and steel
products on sale of such goods
manufactured by them
Adjustable
By large import houses Adjustable
By others Final//
Adjustable*
Continued

47
Treatment Rendering/providing of services
In case of a company Adjustable
In other cases Adjustable/
Minimum
Execution of contracts
By public company listed on a stock
exchange
Adjustable
By resident person providing services
by way of operation of container or
chemical or oil terminal at a sea-port
in Pakistan or of an infrastructure
project covered by the Government’s
Investment Policy, 1997
Adjustable
By others including sportsperson Final
• Clarifications

48
SERVICES OF STITCHING, DYING, ETC
Section 153(2)
Person(s) liable
to deduct tax
• Exporter
• Export house
From whom • Resident person; and
• Permanent establishment in Pakistan of the non-
resident
Rate 1.00% 0.50%
On Gross amount of payment for providing of services or
rendering of services on account of Stitching, Dying,
Printing, Embroidery, Washing, Sizing and Weaving
Treatment Final

49
EXPORT REALIZATIONS
Section 154(1) and (2)
Person(s) liable
to deduct tax
Authorized dealer in foreign exchange
From whom • Exporter of goods; and
• Indenting commission agents
Rate 01.00% - On export of goods
05.00% - On indenting commission
On Foreign exchange proceeds of goods exported or
indenting commission
When At the time of realization of the export proceeds or
indenting commission
Treatment Final / Adjustable*
• Clarifications

50
INDIRECT EXPORTS
Section 154(3)
Person(s) liable
to deduct tax
Banking company
From whom Person
Rate 01.00%
On Realization of proceeds on account of sale of goods to
an exporter under:
a. an inland back-to-back letter of credit; or
b. any other arrangement as prescribed by the Board
(*)
When At the time of realization of the sale proceeds or
realizing the payment made through crossed cheque
* (e.g. Payments made through crossed cheques to indirect exporters
against Standard Purchase Order in the format prescribed by the State
Bank of Pakistan).

51
EXPORTS BY INDUSTRIAL UNDERTAKING
LOCATED IN EPZ – Section 154(3A)
Person(s) liable
to deduct tax
The Export Processing Zone Authority established under
the Export Processing Zone Authority Ordinance, 1980
From whom Industrial undertaking located in the areas declared by
the Federal Government to be a Zone within the
meaning of the Export Processing Zone Authority
Ordinance, 1980
Rate 01.00%
On Proceeds of the export of goods
When At the time of export of goods

52
INDIRECT EXPORTERS
Section 154(3B)
Person(s) liable
to deduct tax
• Direct exporter;
• Export House registered under the Duty and Tax
Remission for Export Rules, 2001 provided in sub-
Chapter 7 of Chapter XII of the Customs Rules,
2001
From whom Indirect exporter (defined under sub-Chapter 7 of
Chapter XII of the Customs Rules, 2001)
Rate 01.00%
On Proceeds of the export of goods
When At the time of payment against a firm contract

53
EXPORTS (Land Routes)
Section 154(3C)
Person(s) liable
to deduct tax
Collector of Customs
From whom Exporter of goods
Rate 01.00%
On Gross value of the goods exported
When At the time of export of goods

54
RENT
Section 155
Person(s)
liable to deduct
tax
• Federal Government; Provincial Government;
• Local Government;
• Company;
• Non-Profit Organization;
• Charitable Institution;
• Diplomatic Mission of a foreign state;
• Private educational institution;
• Boutique;
• Beauty parlour;
• Hospital;
• Clinic;
• Maternity home;
• Individuals or association of persons paying gross
rent of rupees one and a half million and above in a
year;
• Any other person notified by the Board (Till to date
no such person has been notified)
Continued

55
RENT
Section 155
From Recipient of rent of immovable property
Rate 15.00% - Where the recipient of rent is a
company
As per - Where the recipient of rent is an
Rate individual or an association of
Card persons
On Gross amount of rent of immovable property (including
rent of furniture and fixtures, and amounts for services
relating to such property)
Continued

56
RENT
Section 155
When At the time the rent is actually paid
Rate card Gross Amount of
Rent between
Rate of tax deduction
Rs. 0 and
Rs. 150,000
0.00%
Rs. 150,001 and
Rs. 400,000
10% of the gross amount of rent
exceeding Rs. 150,000
Rs. 400,001 and
Rs. 1,000,000
Rs. Nil plus 10% of the gross
amount of rent exceeding Rs.
150,000
Exceeds
Rs. 1,000,000
Rs. 85,000 plus 15% of the gross
amount of rent exceeding Rs.
1,000,000

57
PRIZES AND WINNINGS
Section 156
Person(s) liable
to deduct tax
Person
From whom Recipient of prize or winnings
Rate 15.00% - On Prize of a Prize Bond and
Crossword Puzzle
20.00% - On all other prizes and winnings
On • Amount of prize on a prize bond;
• Amount of prize or winnings from a raffle, lottery,
quiz or crossword puzzle;
• Amount of prize offered by companies for promotion
of sale; or
• Fair market value of the prize or winnings if it is not
paid in cash
When At the time the prize or winnings are paid
Treatment Final

58
COMMISSION/DISCOUNT ON PETROLEUM
PRODUCTS – Section 156A
Person(s) liable
to deduct tax
Person
From whom Petrol pump operators
Rate 12.00% 10.00%
On Commission or discount allowed to the petrol pump
operator
When At the time the commission is actually paid
Treatment Final
• Clarifications

59
WITHDRAWAL FROM PENSION FUND
Section 156B
Person(s) liable
to deduct tax
Pension Fund Manager
From whom Individuals maintaining pension accounts with an
approved pension fund
Rate Average rate of tax on the taxable income of the
individual for three preceding years
On • Any amount withdrawn before the retirement age
except under following situations (*)
• In excess of 50% of the accumulated balance
withdrawn on or after the retirement age except
under the following situations (**)
When At the time of withdrawal from pension fund
Continued

60
WITHDRAWAL FROM PENSION FUND
Section 156B
Except
under
following
situations
(*)
• Where the eligible person suffers from any disability as
mentioned in sub-rule (2) of rule 17 of the Voluntary Pension
System Rules, 2005 which renders him unable to continue
with any employment at the age which he may so elect to be
treated as the retirement age or the age as on the date of such
disability if not so elected by him [Section 156B]; or
• Payment to the nominated survivor of the deceased eligible
person which would be treated as if the eligible person had
reached the age of retirement [Section 156B];
Except
under
following
situations
(**)
• Where the withdrawal is Invested in an approved income
payment plan of a pension fund manager [Section 156B];
• Where the withdrawal is paid to a life insurance company for
the purchase of an approved annuity plan [Section 156B]; or
• Where the amount is transferred to another individual pension
account of the eligible person or the survivors’ pension account
in case of death of the eligible person maintained with any
other pension fund manager as specified in the Voluntary
Pension System Rules, 2005 [Section 156B].

61
1st Session
Related Q & A

62
2nd Session
Section wise under standing of:
 Persons responsible - Withholding Tax Agents
 Persons/transactions attracting withholding tax
 Standard rates of withholding tax
 Reduced rates of withholding tax
 Value/amount on which withholding tax apply
 Time of collection or deduction
 Credit for tax withheld (Treatment)
 Exceptions/exclusions
 Related Q & A

63
– Sections 231A to 236J
• Cash withdrawal from a bank (Section 231A);
• Issuance of banking instruments (Section 231AA);
• Registration, transfer or purchase of motor vehicles (Section 231B);
• Brokerage and commission (Section 233);
• Stock exchange transactions (Section 233A);
• Margin financing in shares business (Section 233AA)
• Motor vehicles (Section 234);
• CNG stations (Section 234A);
• Industrial and commercial consumers of electricity (Section 235);
• Domestic electricity consumption (Section 235A)
• Steel melters, re-rollers, etc (Section 235B)
• Telephone users (Section 236);
Continued

64
– Sections 231A to 236J
• Sale by auction (Section 236A);
• Domestic air travel ticket (Section 236B)
• Sale, purchase or transfer of immovable property (Section 236C and
236K)
• Functions and gatherings (Section 236D)
• Foreign-produced TV plays and serials (Section 236E)
• Cable operators and other electronic media (Section 236F)
• Sales to distributors, dealers & wholesalers (Section 236G)
• Sales to retailers (Section 236H)
• Fees of educational institutions (Section 236I)
• Commission agents and arhatis etc. (Section 236J)
• International air travel ticket (Section 236L)

65
CASH WITHDRAWAL FROM A BANK
Section 231A
Person(s) liable
to deduct tax
Banking Company
From whom Persons withdrawing cash, other than the following:
a. Foreign diplomat;
b. Diplomatic mission in Pakistan; or
c. Person who produces a certificate from the
Commissioner that his income during the tax
year is exempt. [Section 231A(2)]
Rate (Filer) 00.30%
Rate (Non-Filer) 00.50%
On Cash withdrawn exceeding Rs. 50,000 during a day
When At the time the cash is withdrawn
• Clarifications

66
ISSUANCE OF BANKING INSTRUMENTS
Section 231AA
Person(s) liable
to collect tax
• Non-banking financial institution;
• Exchange Company;
• Any authorized dealer of foreign exchange
From whom • Persons (excluding *) to whom sale of any
instrument (including Demand Draft, Pay Order,
Call Deposit Receipt, Short Term Deposit Receipt,
Security Deposit Receipt, Rupee Travelers Cheque
or any other instrument of bearer nature) is made
against cash payment;
• Persons (excluding *) who transfer any sum
against cash through online transfer, telegraphic
transfer, mail transfer or any other mode of
electronic transfer
Continued

67
ISSUANCE OF BANKING INSTRUMENTS
Section 231AA
From whom Excluding:
• A foreign diplomat or a diplomatic mission in
Pakistan; or
• A person who produces a certificate from the
Commissioner that its income during the tax year is
exempt.
Rate 00.30%
On The amount/value of the instrument or transfer if it
exceeds Rs. 25,000 during a day
When At the time of sale of instrument or transfer

68
REGISTRATION, TRANSFER OR PURCHASE
OF MOTOR VEHICLE - Section 231B
Person(s) liable
to collect tax
• Motor vehicle registration authorities of Excise and
Taxation Department;
• Manufacturer of motor vehicle
From whom • Persons applying for registration new locally
manufactured motor vehicle (if tax has not been
paid by the person applying for registration
under this section to the manufacturer or under
section 148 (import stage));
• Persons purchasing motor car or jeep from a
manufacturer;
• Persons applying for transfer of registration or
ownership of a private motor vehicle, within five
years from the date of first registration,
Other than a foreign diplomat or diplomatic mission in
Pakistan [Proviso to section 231B]
Rates of tax
collection
According to the engine capacity (see next slide)
Continued

69
Continued
Rates of tax collection
Engine capacity: 2015 2014
Upto 850cc Rs. 10,000 Rs. 10,000 Rs. 10,000
851cc to 1000cc Rs. 20,000 Rs. 25,000 Rs. 20,000
1001cc to 1300cc Rs. 30,000 Rs. 40,000 Rs. 30,000
1301cc to 1600cc Rs. 50,000 Rs. 100,000 Rs. 50,000
1601cc to 1800cc Rs. 75,000 Rs. 150,000 Rs. 75,000
1801cc to 2000cc Rs. 100,000 Rs. 200,000 Rs. 100,000
2001cc to 2500cc Rs. 150,000 Rs. 300,000 Rs. 150,000
2501cc to 3000cc Rs. 200,000 Rs. 400,000 Rs. 150,000
Above 3000cc Rs. 250,000 Rs. 450,000 Rs. 150,000

70
Rates of tax
collection
In case of transfer of registration or ownership of a
private motor vehicle the rate of collection of advance
tax shall be reduced by 10% for each year from the
date of first registration
On According to the engine capacity
When • At the time of registration of new motor vehicle;
• At the time of purchase of motor car or jeep from a
manufacturer; or
• At the time of transfer of registration

71
BROKERAGE OR COMMISSION
Section 233
Person(s) liable
to deduct tax
• Provincial Government;
• Local Government;
• Company;
• Association of persons constituted by, or under,
law
From whom Recipient of brokerage or commission
Rate 12.00% 10.00% - Other than commission of
advertising agents
07.50% 05.00% - On commission of advertising
agents
On Amount of brokerage or commission
When At the time the brokerage or commission is actually paid
(*)
Continued

72
BROKERAGE OR COMMISSION
Section 233
* (If an agent retains commission or brokerage from any
amount remitted by him to the principal, he shall be
deemed to have been paid the commission or brokerage
by the principal and the principal shall collect advance
tax from the agent)
Treatment Final
• Clarifications

73
COMMISSION OF MEMBERS OF STOCK
EXCHANGES – Section 233A
Person(s) liable
to collect tax
Stock Exchange registered in Pakistan
From whom Members of stock exchange
Rate 00.01%
On Purchase and/or sale value of shares (in lieu of
commission)
When At the time of making or receiving payment

74
MARGIN FINANCING IN SHARE BUSINESS ETC
Section 233AA
Person(s) liable
to deduct tax
NCCPL (National Clearing Company of Pakistan
Limited)
From whom • Members of the stock exchanges registered in
Pakistan;
• Margin Financers;
• Trading Financers;
• Security Lenders
Rate 10.00%
On Profit or mark-up or interest earned by the member,
margin financier, trading financier or securities lender
When At the time of making or receiving payment

75
MOTOR VHEICLES
Section 234
Person(s) liable
to collect tax
Person collecting motor vehicle tax (Excise and
Taxation Department)
From whom Owner of motor vehicle excluding:
a. Motor cars used for more than ten years in Pakistan
[Section 234(2A)];
b. Passenger transport vehicle with registered seating
capacity of ten or more persons after a period of ten
years from the first day of July of the year of make of
the vehicle [Section 234(3)];
c. Goods transport vehicle with registered laden weight
of less than 8120 kilograms after a period of ten
years from the date of first registration of vehicle
in Pakistan [Section 234(4)]
Continued

76
MOTOR VHEICLES
Section 234
Rate • In the case of goods transport vehicles - Rs. 5 per
kilogram of the registered laden weight (See
reduced rates)
• In the case of passenger transport vehicles plying
for hire with registered seating capacity of—
(a) Four or more persons but less than ten
persons – Rs. 25 per seat per annum
(b) Ten or more persons but less than
twenty persons - Rs. 60 per seat per
annum
(c) Twenty persons or more - Rs. 500 per seat
per annum (see reduced rates)
• In case of private motor cars (see next slide)
Continued

77
MOTOR VHEICLES
Section 234
Continued
Engine Capacity: 2015 2014
Where Motor Vehicle Tax is collected on annual basis
upto 1000cc Rs. 1,000 Rs. 1,000 Rs. 750
1001cc to 1199cc Rs. 1,800 Rs. 3,600 Rs. 1,250
1200cc to 1299cc Rs. 2,000 Rs. 4,000 Rs. 1,750
1300cc to 1499cc Rs. 3,000 Rs. 6,000 Rs. 3,000
1500cc to 1599cc Rs. 4,500 Rs. 9,000 Rs. 3,000
1600cc to 1999cc Rs. 6,000 Rs. 12,000 Rs. 4,000
2000cc & above Rs. 12,000 Rs. 24,000 Rs. 8,000

78
MOTOR VHEICLES
Section 234
Continued
Engine Capacity: 2015 2014
Where Motor Vehicle Tax is collected in lump sum
upto 1000cc Rs. 10,000 Rs. 10,000 Rs. 7,500
1001cc to 1199cc Rs. 18,000 Rs. 36,000 Rs. 12,500
1200cc to 1299cc Rs. 20,000 Rs. 40,000 Rs. 17,500
1300cc to 1499cc Rs. 30,000 Rs. 60,000 Rs. 30,000
1500cc to 1599cc Rs. 45,000 Rs. 90,000 Rs. 30,000
1600cc to 1999cc Rs. 60,000 Rs. 120,000 Rs. 40,000
2000cc & above Rs. 120,000 Rs. 240,000 Rs. 80,000

79
MOTOR VHEICLES
Section 234
Reduced rate • Rs. 1,200 - Goods transport vehicles with laden
weight of 8120 kilograms or more after a period of
ten years from the date of first registration of the
vehicle in Pakistan [Paragraph (1A) of Division III of
Part IV of 1st Schedule].
• In the case of goods transport vehicles - Rs. 2 per
kilogram of the registered laden weight [Clause (14)
of Part II 2nd Schedule]
• In the case of passenger transport vehicles plying
for hire with registered seating capacity of Twenty
persons or more - Rs. 250 per seat [Clause (14B)
of Part II 2nd Schedule]
Continued

80
MOTOR VHEICLES
Section 234
On • Registered laden weight of goods transport vehicles
• Registered seating capacity of passenger transport
vehicles plying for hire
• Engine capacity of private motorcars
When At the time of collecting motor vehicle tax (If motor
vehicle tax is collected in installments or lump sum, the
tax is also collected in installments or lump sum)

81
NATURAL GAS CONSUMPTION BY CNG STATIONS
Section 234A
Person(s) liable
to collect tax
Person preparing gas consumption bill
From whom Consumer of gas for compressed natural gas station
Rate 04.00%
On Amount of gas bill
When At the time of realization of gas consumption charges
Treatment Final

82
ELECTRICITY CONSUMPTION
Section 235
Person(s) liable
to collect tax
Person preparing electricity consumption bill
From whom Commercial and Industrial consumers of electricity
Rate Where the amount of electricity bill is
(see next slide)
On Amount of electricity consumption charges
When Along with payment of electricity consumption charges
Treatment In case of company Adjustable
In case of other than a company:
Where the monthly bill does not
exceed Rs. 30,000
Adjustable/
Minimum
Where the monthly bill exceeds Rs.
30,000
Adjustable
Continued

83
ELECTRICITY CONSUMPTION
Section 235
Rate Bill amount between Rate of tax
Rs. 0 and Rs. 400 Rs. 0
Rs. 401 and Rs. 600 Rs. 80
Rs. 601 and Rs. 800 Rs. 100
Rs. 801 and Rs. 1,000 Rs. 160
Rs. 1,001 and Rs. 1,500 Rs. 300
Rs. 1,501 and Rs. 3,000 Rs. 350
Rs. 3,001 and Rs. 4,500 Rs. 450
Rs. 4,501 and Rs. 6,000 Rs. 500
Rs. 6,001 and Rs. 10,000 Rs. 650
Rs. 10,001 and Rs. 15,000 Rs.1000
Rs. 15,001 and Rs. 20,000 Rs.1500
Above Rs. 20,000 10% of the billed
amount for commercial
consumers; and
5% of the billed
amount for industrial
consumers

84
DOMESTIC ELECTRICITY CONSUMPTION
Section 235A
Person(s) liable
to collect tax
From whom Domestic consumers of electricity
Rate Where the amount of monthly electricity consumption
bill is:
• Less than Rs. 100,000 - 0.00%
• Rs. 100,000 or more - 7.50%
On Amount of electricity consumption charges

85
STEEL MELTERS, RE-ROLLERS, ETC
ELECTRICITY CONSUMERS - Section 235B
Person(s) liable
to collect tax
From whom Steel melters, steel re-rollers and composite steel units
registered for the purpose of Chapter XI of Sales Tax
Special Procedure Rules, 2007
Rate Rupee 1 per unit of electricity consumed for production
of steel billets, ingots and mild steel (MS products)
excluding stainless steel
On Units of electricity consumed
Treatment Non-Adjustable – No credit allowed to any person
This tax shall be deemed to be the tax required to be
deducted U/S 153(1) from payments for local scrap and
credit of this shall not be admissible to any person.
Corresponding exemption to the steel melters, steel re-
rollers, composite steel units, as a payer, in respect of
purchase of scrap from application of section 153(1)(a)
has been granted

86
PHONE USAGE
Section 236
Person(s) liable
to collect tax
Person preparing phone usage bill
Person issuing or selling prepaid cards for phone
From whom Phone subscriber and purchaser of prepaid phone
cards excluding the following:
a. Foreign diplomat;
b. Diplomatic mission in Pakistan; or
c. Person who produces a certificate from the
Commissioner that his income during the tax
year is exempt from tax [Section 236(4)]
Rate In the case of phone subscriber (other than mobile
phone) where the monthly bill —
(a) Up to Rs. 1,000 Rs. Nil
(b) Exceeds Rs. 1,000 10% of the amount
exceeding Rs.1,000
14.00% - In the case of subscriber of mobile
15.00% telephone, pre-paid phone card or sale of
units through any electronic medium or
whatever form
Continued

87
PHONE USAGE
Section 236
On Amount of bill or sale price of a pre-paid telephone card
or sale of units through of units through any electronic
medium or whatever
When Along with payment of telephone bill or at the time of
issuance or sale of pre-paid telephone cards

88
SALE BY AUCTION OR AUCTION BY A TENDER
Section 236A
Person(s) liable
to collect tax
Person making sale by public auction or auction by a
tender
From whom Purchaser of any property (including the awarding of
any lease to any person, including a lease of the right to
collect tolls, fees or other levies, by whatever name
called) or goods confiscated or attached either
belonging to or not belonging to the Government, local
Government, any authority, a company, a foreign
association declared to be a company under sub-clause
(vi) of clause (b) of sub-section (2) of section 80, or a
foreign contractor or a consultant or a consortium or
Collector of Customs or Commissioner of Income Tax or
any other authority
Rate 10.00%
On Amount of sale price
When At the time of realization of sale proceeds

89
DOMESTIC AIR TRAVEL
Section 236B
Person(s) liable
to collect tax
Airlines issuing Person preparing air travel ticket
From whom Purchaser of domestic air travel ticket excluding the
following:
(a) Federal Government;
(b) Provincial Government;
(c) Person who produces a certificate from the
Commissioner Inland Revenue that income of such
person during the tax year is exempt.
Rate 05.00%

90
SALE OR TRANSFER OF IMMOVABLE PROPERTY
Section 236C and 236K
Person(s) liable
to collect tax
Person responsible for registering or attesting transfer
of any immovable property
From whom • Seller or transferor of immovable property
• Purchaser or transferee of immoveable property
Other than
• The Federal Government, a Provincial Government, a
Local Government, a foreign diplomatic mission in
Pakistan, as purchaser or transferee; and
• Expatriate Pakistanis, as purchaser or transferee, in a
scheme introduced by the Federal Government, or
Provincial Government or an Authority established
under a Federal or Provincial law for expatriate
Pakistanis.
Rate See next slide
On Gross amount of the consideration received by the seller
or transferor of immovable property
When At the time of registering or attesting the transfer
Continued

91
SALE OR TRANSFER OF IMMOVABLE PROPERTY
Section 236C and 236K
Collection of tax
from:
Value of immovable
property
2015 2014
Filer Non-filer No
distinction
Seller or transferor Not applicable 0.50% 1.00% 0.50%
Purchaser or
transferee
Upto Rs. 3,000,000 0.00% 0.00% NA
Purchaser or
transferee
Exceeds Rs. 3,000,000 1.00% * 1.00% /
2.00%
NA
* Currently 1% and 2% from the date appointed by the Board

92
FUNCTIONS AND GATHERINGS
Section 236D
Person(s)
liable to collect
tax
The owner, a lease-holder, an operator or a manager of
a marriage hall, marquee, hotel, restaurant, commercial
lawn, club, a community place or any other place used
for holding a “function”.
From whom A person arranging or holding a “function” in a marriage
hall, marquee, hotel, restaurant, commercial lawn, club,
a community place or any other place used for such
purpose
Rate 05.00% 10.00%
On The total amount of the bill including the amount of the
bills for food, service or any other facility provided by
any other person
When At the time of realization of the payment
"function" includes any wedding related event, a seminar, a workshop, a
session, an exhibition, a concert, a show, a party or any other gathering
held for such purpose

93
FOREIGN PRODUCED TV PLAYS AND SERIALS
Section 236E
Person(s) liable
to collect tax
Any licensing authority certifying any foreign TV drama
serial or a play dubbed in Urdu or any other regional
language, for screening and viewing on any landing
rights channel
From whom Person applying for screening and viewing certification
Rate • Rs. 100,000 per episode of the serial
• Rs. 100,000 per play (single episode)
On Not applicable
When Not specified (Logically at the time of certification)

94
CABLE OPERATORS AND OTHER
ELECTRONIC MEDIA – Section 236F
Person(s) liable
to collect tax
Pakistan Electronic Media Regulatory Authority
From whom Cable operators and other electronic media licensee
(For this, "cable television operator", "DTH",
"Distribution Service", "electronic media", "IPTV", "loop
holder", "MMDS", "mobile TV", have the same
meanings as defined in Pakistan Electronic Media
Regulatory Authority Ordinance, 2002 and rules made
there under.)
Rate • In the case of IPTV, FM Radio, MMDS, Mobile TV,
Mobile Audio, Satellite TV Channel and Landing
Rights – 20% of the permission fee or renewal fee,
as the case may be.
Continued

95
Rate In case of cable television operators:
License Category Tax on Tax on
License Renewal
H Rs. 7,500 Rs. 10,000
H-1 Rs. 10,000 Rs. 15,000
H-II Rs. 25,000 Rs. 30,000
R Rs. 5,000 Rs. 30,000
B Rs. 5,000 Rs. 40,000
B-1 Rs. 30,000 Rs. 50,000
B-2 Rs. 40,000 Rs. 60,000
B-3 Rs. 50,000 Rs. 75,000
B-4 Rs. 75,000 Rs.100,000
B-5 Rs. 87,500 Rs.150,000
B-6 Rs.175,000 Rs.200,000
B-7 Rs.262,500 Rs.300,000
B-8 Rs,437,500 Rs.500,000
B-9 Rs.700,000 Rs.800,000
B-10 Rs.87S,500 Rs.900,000
CABLE OPERATORS AND OTHER ELECTRONIC
MEDIA – Section 236F

96
On Not applicable
When At the time of issuance of license for distribution
services or renewal of the license
CABLE OPERATORS AND OTHER ELECTRONIC
MEDIA – Section 236F

97
DISTRIBUTORS, DEALERS & WHOLESALERS
Section 236G
Person(s)
liable to collect
tax
Every manufacturer or commercial importer of
electronics, sugar, cement, iron and steel products,
fertilizer, motorcycles, pesticides, cigarettes, glass,
textile, beverages, paint or foam sector
From whom Distributors, dealers and wholesalers
Rate 00.10%
On Gross amount of sales
When At the time of sale
Nature of goods: 2015 2014
Filer Non-filer No-
distinction
Fertilizer 0.20% 0.40% 0.10%
Other than fertilizer 0.10% 0.20% 0.10%

98
RETAILERS
Section 236H
Person(s) liable
to collect tax
Every manufacturer, distributor, dealer, wholesaler or
commercial importer of electronics, sugar, cement,
iron and steel products, fertilizer, motorcycles,
pesticides, cigarettes, glass, textile, beverages, paint or
foam sector
From whom Retailers
Rate 00.50%
On Gross amount of sales
When At the time of sale

99
FEES OF EDUCATIONAL INSTITUTIONS
Section 236I
Person(s) liable
to collect tax
Person preparing “fee” voucher or challan
"fee" includes, tuition fee and all charges received by
the educational institution, by whatever name called,
excluding the amount which is refundable
From whom Either of the parents or guardian making payment of the
“fee” exceeding Rs. 200,000 annually
Rate 05.00%
On Amount of “fee” paid to an educational institution
When In the manner the fee is charged

100
COMMISSION AGENTS AND ARHATIS ETC
Section 236J
Person(s)
liable to collect
tax
Every “market committee”
"market committee" includes any committee or body
formed under any provincial or local law made for the
purposes of establishing, regulating or organizing
agricultural, livestock and other commodity markets
From whom Dealers, commission agents and arhatis etc.
Rate Group or Class Amount of Tax
A Rs. 10,000
B Rs. 7,500
C Rs. 5,000
Any other Rs. 5,000
On Not applicable
When At the time of issuance or renewal of licenses

101
INTERNATIONAL AIR TRAVEL
Section 236L
Person(s) liable
to collect tax
Every airline issuing ticket for journey originating from
Pakistan
From whom Purchaser of international air travel ticket
Rate Economy class ticket - 0.00%
First/business/club class tickets - 4.00%

102
CREDIT OF TAX COLLECTED OR
DEDUCTED Section 168
Continued
Amount of tax deducted at source from a payment is treated as income
derived by the person to whom the payment was made.
Amount of tax collected or deducted at source is treated as tax paid by
the person from whom the tax was collected or deducted.
Tax collected or deducted at source is either:
• “Non-Adjustable tax collected or deducted at source” i.e., tax
collected or deducted at source for which credit is not allowed in
determining the income tax payable on taxable income. These are
taxes collected or deducted against:
– Income subject to a separate charge;
– Income subject to final taxation;
• “Adjustable tax collected or deducted at source” i.e., tax
collected or deducted at source, other than the non-adjustable tax
collected or deducted at source, for which credit is allowed in
determining the income tax payable on taxable income.
Back

103
Adjustable* at the option of the taxpayer to opt out from the final tax
regime, which is subject to following conditions:
Imports
Section 148
The minimum tax liability under the normal tax
regime should not be less than 5.50% and 6.00% of
the value of the imports for corporate and non-
corporate tax payers respectively 60% of the tax
already collected/collectable at import stage.
Sale of goods
Section 153(1)(a)
the payments received against sale of goods for
corporate and non-corporate tax payers respectively
70% of the tax already deducted/deductible from the
payments received against sale of goods.
Execution of
contracts Section
153(1)(c)
the payments received against execution of contracts
for corporate and non-corporate tax payers
respectively.
Back Continued

104
Adjustable* at the option of the taxpayer to opt out from the final tax
regime, which is subject to following conditions:
Services of
stitching etc.
Section 153(2)
regime should not be less than 0.50% of the
payments received against services of stitching etc.
Exports and
indenting
commission
Section 154
regime should not be less than 50% of the tax
already collected/collectable from such exports and
indenting commission.
Petrol Pump
Operators Section
156A
commission received for sale of petroleum products.
Brokerage and
Commission
Section 233
brokerage and commission received.
Back

105
2nd Session
Related Q & A

106
3rd Session (Part-I)
Exemptions
Exemption or lower rate certificate
Obligations of withholding agent:
 Payment/deposit of tax withheld
 Failure to collect, deduct or deposit
 Recovery from whom tax was not withheld
 Certificate of tax withheld
 Withholding tax statements
Priority of tax withheld
Indemnity
Service charges for tax withheld
Related Q & A

107
EXEMPTIONS
Exemptions with respect to collection and deduction of tax are of three
types:
• Where specified persons are exempt from collection or
deduction of tax by the withholding agents;
• Where specified goods, payments, etc. are exempt from
collection or deduction of tax by the withholding agents; and
• Where specified withholding agents are exempt from
collecting or deducting the tax.
Following additional material is separately provided:
• Complete list of exemptions

108
EXEMPTION OR LOWER RATE CERTIFICATE
Section 159
A person responsible/required to collect or deduct tax at source, is
obliged to collect or deduct the full amount of tax specified under the 1st
Schedule to the Ordinance (i.e. standard rates), unless there is in
force a exemption certificate or lower rate certificate issued by the
Commissioner, in which case the withholding agent is required to
comply with such certificate.
The true impact of the above, is that exemption or reduce rate for
collection or deduction tax at source provided through the 2nd Schedule
or SRO’s are not operative unless a certificate to this effect is issued by
the Commissioner. However, practically, such exemptions and
reduced rates are being applied without a certificate issued by the
Commissioner.
Continued

109
EXEMPTION OR LOWER RATE CERTIFICATE
Section 159
For this purpose a person from whom tax is required to be collected or
deducted at source, can apply in writing (form prescribed under Rule 40)
to the Commissioner for issuance of an exemption certificate or a lower
rate certificate.
The Commissioner is empowered to issue such certificates (form
prescribed under Rule 41) on being satisfied that:
• The amount subject to collection or deduction of tax at source is:
– Exempt from tax under the Ordinance; or
– Subject to tax at a rate lower than that specified in the First
Schedule to the Ordinance; or
•The income of the recipient of profit on securities of the Federal,
Provincial or Local Government is not likely to be chargeable to tax
under the Ordinance.

110
PAYMENT OF TAX COLLECTED OR DEDUCTED
Section 160 and Rule 43
Tax collected or deducted at source or purported to be collected or
deducted at source is required to be paid to the Commissioner by way
of credit to the Federal Government, by the “withholding agent”,
within the time and in the manner as under:
• Where the tax is collected or deducted by the Federal
Government or a Provincial Government on the day the tax is
collected or deducted; or
• Where the tax is collected or deducted by a person, other than the
Federal Government or a Provincial Government, by remittance to
the Government Treasury or deposit in an authorized branch of the
SBP or NBP within seven days from the end of each week ending
on every Sunday.
A tax deposit slip form (Challan) is prescribed for deposit of tax
collected or deducted.
Continued

111
Most of the branches of State Bank of Pakistan and National Bank of
Pakistan have been automated to receive the tax payments and issue a
Computerized Payment Receipt (CPR). In order to ensure correct credit
of tax to the person from whom it has been collected or deducted, it is
mandatory to provide the following information at the time of deposit of
the tax collected or deducted:
a. Particulars of the withholding agent:
i. National Tax Number (NTN) or Free Tax Number (FTN);
ii. Name and address
b. Particulars of the person from whom tax has been collected or
deducted:
i. National Tax Number (NTN) or Computerized National Identity
Card Number (CNIC) or Passport No. in case of non-residents;
and
ii. Name and address;
Continued

112
c. Particulars of the transaction from which tax has been
collected or deducted:
i. Nature of transaction;
ii. Section of the Income Tax Ordinance, 2001 under which
tax has been collected or deducted;
iii. Gross amount of the transaction on which tax has
been collected or deducted; and
iv. Amount of tax collected or deducted.
Continued

113
At the option of the withholding agent:
a. A separate tax payment in respect of each person from whom tax
has been collected or deducted can be made; or
b. A combined payment in respect of all persons from whom tax has
been collected or deducted can be made, in which case the
particulars and details of the transaction in respect of each person
from whom tax has been collected or deducted are to be
separately stated. In case of manual tax payment deposit slip form
(Challan) a maximum of ten persons can be accommodated and in
case of computerized tax payment deposit slip there is no limit.
Continued

114
The procedure for deposit of the tax collected or deducted at any
branch of State bank of Pakistan and National Bank of Pakistan,
currently, is as under:
• Manual payment:
- At branches, which are not fully automated, through tax deposit
receipts (Challan) dully filed and completed (in respect of the
requisite particulars and details as stated earlier).
- At branches, which are fully automated, by providing the
requisite particulars and details as stated above.
This may take a long time for the facilitation staff to transfer the
details on the computerized system.
To avoid delays:
Continued

115
Alternatively, by providing a Payment Slip Identification (PSID)
number generated from FBR’s web portal (https://e.fbr.gov.pk)
by entering or uploading the requisite particulars from the
convenience of your office or home. This will save your waiting
and processing time at the bank branches.
At a large number of branches of NBP and SBP, Taxpayer
Facilitation Desks are also established where the Facilitation
Officers (FOs) prepare the PSID on behalf of the taxpayers for
expeditious payment of taxes for those taxpayers who bring
manually filled deposit receipts.
Continued

116
• Electronic payment:
The pre-requisite is that the “withholding agent” should have a
digital signature and an account with National Bank of Pakistan
from where the electronic transfer of funds can be done. The
procedure is to first generate a Payment Slip Identification (PSID)
number (as explained above) from our web portal
httpp://e.fbr.gov.pk) and authorizing the transfer of funds under a
digital signature. This is the speediest and efficient manner of
payment of tax collected or deducted at source from the comfort of
your office or home.

117
FAILURE TO COLLECT OR DEDUCT TAX OR
DEPOSIT THE TAX COLLECTED OR DEDUCTED
Section 161 and 163
A “withholding agent” is personally liable to pay to the
Commissioner the amount of tax, along with the default surcharge (@
18% per annum), if the “withholding agent”:
• Fails to collect or deduct tax at source as required; or
• Fails to pay the tax collected or deducted to the Commissioner as
required.
The Commissioner can proceed to recover the same by an order
making the “withholding agent” personally liable, after providing an
opportunity of being heard.
The provisions of the Ordinance with regard to the recovery of the tax
due under an assessment equally apply to any amount of tax
collectable or deductible at source.
Continued

118
If the “withholding agent” fails to collect or deduct tax at source and
the same is recovered from the “withholding agent”, after making him
personally liable, the withholding agent is entitled to recover the
same from the person from whom such tax was collectable or
deductible at source.
If the tax required to be collected or deducted at source has not been
so deducted or collected and in the meanwhile, it is established that
such tax has been paid by the person from whom such tax was
collectable or deductible, the “withholding agent” is liable to pay
default surcharge (@ 18% per annum) from the date the “withholding
agent” was required to collect or deduct the tax to the date it is paid by
the person from whom such tax was collectable or deductible.
Section 161 and 163

119
If the “withholding agent” fails to collect or deduct tax at source the
following expenditures are not allowed as deduction for the purpose of
computing income:
• Salary
• Rent
• Brokerage or commission
• Profit on debt
• Payment to non-resident
• Payment for services or fee
DEDUCTIONS NOT ALLOWED – Section 21

120
Any person responsible for collection or deduction of tax at source as a
withholding agent, without reasonable excuse:
• fails to collect or deduct the tax is liable to a penalty of
Rs.25,000 or 10% of the amount of tax involved, whichever is
higher;
• fails to deposit the tax collected or deducted within the time
allowed for this purpose is liable for a penalty of Rs. 25,000 or
10% of the amount of tax involved, whichever is higher; and
• fails to furnish, within the time allowed for this purpose, any
statement(s) of tax collected or deducted is liable for a penalty of
Rs. 2,500 for each day of default subject to a minimum penalty
of Rs. 50,000 and maximum penalty of 25% of the tax payable;
PENALTY – Section 182

121
Any person who, without reasonable excuse:
• fails to comply with the obligation to collect or deduct tax;
• having collected or deducted fails to pay the tax; or
• fails to furnish the monthly and annual statements of tax
collected or deducted;
is treated as having committed an offence punishable on conviction
with a fine or imprisonment for a term not exceeding one year, or both.
Note: Imposition of the penalty is in addition to prosecution
proceedings and not in derogation of any other punishment under the
Income Tax Ordinance, 2001 or any other law in force.
PROSECUTION – Section 191

122
RECOVERY OF TAX FROM WHOM TAX WAS NOT
COLLECTED OR DEDUCTED – Section 162 and 163
The Commissioner, after passing an order to this effect, is also
empowered to recover the amount of tax, which the “withholding
agent” failed to collect or deduct, from the person from whom it was
collectable or deductible.
The recovery of tax by the Commissioner from the person from whom
it was collectable or deductible does not absolve the “withholding
agent” from any other legal action in relation to such failure, or from a
charge of default surcharge (@ 18% per annum) or the disallowance of
a deduction for the expense to which the failure relates.
The provisions of the Ordinance with regard to the recovery of the tax
due under an assessment equally apply to any amount of tax
recoverable from the person from whom the tax was required to
collected or deducted at source.

123
CERTIFICATE OF COLLECTION OR DEDUCTION
OF TAX – Section 164 and RULE 42
“Certificate of collection or deduction of tax at source” – A
“withholding agent”, at the time of (rules are contrary to this)
collection or deduction of tax at source, is required to issue to the
person from whom the tax is collected or deducted, copies of the tax
deposit receipt (challan) of payment or any other equivalent document
along with a certificate (form prescribed under Rule 42) stating the
amount of tax collected or deducted and such other particulars as
prescribed.
“Certificate of collection or deduction of tax at source” is to be
issued by the withholding agent in duplicate and serially numbered.
The certificate of tax collected or deducted is required to be issued:
Where the tax has been deducted from salary under section 149:
• Within 45 days from the end of each financial year; or
• Within 7 days of the ceasing of the employment or at the time of
making payment of final settlement whichever is later, where the
employment ceases before the end of the financial year.
Continued

124
CERTIFICATE OF COLLECTION OR DEDUCTION
OF TAX – Rule 42
Where the tax is collected or deducted under any other provisions;
• Within 15 days after the end of the financial year or discontinuation of
business etc.; or
• Within 7 days where the person from whom tax was collected or
deducted requests for the issuance of the certificate before the end of
the financial year.
Where the original certificate issued is lost, stolen or destroyed:
• Within 7 days from the request in writing for issuance of duplicate
certificate. Such certificate should be clearly marked as “duplicate”.

125
WITHHOLDING TAX STATEMENTS
A withholding agent is required to furnish to the Commissioner :
• “Monthly withholding tax statement” - A single consolidated
statement of all taxes collected or deducted for each month within
15 days from the end of the each month in the form prescribed
under Rule 44(2) accompanied with evidence of deposit of tax
collected or deducted to the credit of the Federal Government; and
• “Annual withholding tax statement” (for the period July to June)
is also required to be furnished by the withholding agent obliged to
deduct tax from salary under section 149 of the Income Tax
Ordinance, 2001 in the form prescribed under Rule 44(1) on or
before 31st August of every year.
In these statements all payments / transactions made during the month
or year, as the case may be, are to be reflected whether tax has been
collected/deducted or not. In case tax has not been collected/deducted,
the reasons thereof, by quoting the relevant section, clause or SRO.
Continued

126
Explanation.— For the removal of doubt, it is clarified that
this sub-section overrides all conflicting provisions
contained in the Protection of Economic Reforms Act, 1992
(XII of 1992), the Banking Companies Ordinance, 1962
(LVII of 1962), the foreign Exchange Regulation Act, 1947
(VII of 1947) and the regulations made under the State
Bank of Pakistan Act, 1956 (XXXIII of 1956), if any, on the
subject, in so far as divulgence of information under section
165 is concerned.
Continued

127
The Commissioner is empowered to:
• Grant an extension of time to furnish a withholding tax statement
after the due date. For this purpose the withholding agent is
required to apply in writing and if the Commissioner is satisfied
that a reasonable cause exists for non-furnishing of the
withholding tax statement by the due date, he/she can, by an
order in writing, grant the withholding agent an extension of time
to furnish the withholding tax statement; and
• Require the withholding agent to furnish a reconciliation of the
amounts mentioned in the annual and monthly withholding tax
statements with the amounts mentioned in the return of income,
statement of final tax, related annexes and other documents
submitted from time to time.
Continued

128
e-filing of monthly and annual statements is mandatory where the
withholding agent is:
– Federal Government;
– A company; or
– An association of persons.

129
PRIORITY OF TAX COLLECTED OR DEDUCTED
Section 166
Tax collected or deducted at source by a withholding agent is:
• Held by the withholding agent in trust for the Federal
Government; and
• Not subject to attachment in respect of any debt or liability of the
withholding agent.
In the event of the liquidation or bankruptcy of the withholding agent,
the amount of tax collected or deducted do not form part of the estate of
the withholding agent in liquidation or bankruptcy and the
Commissioner has a first claim over the amount collected or deducted
before any distribution of property is made.
Every amount that a withholding agent is required to collect or deduct
at source has –
• A first charge on the payment; and
• Deducted prior to any other amount that the withholding agent is
required to deduct from the payment by virtue of an order of any
Court or under any other law.

130
INDEMNITY
Section 167
A withholding agent, who has deducted tax at source from a payment
and remitted the deducted amount to the Commissioner is treated as
having paid the deducted amount to the recipient of the payment for the
purposes of any claim by the recipient for payment of the deducted tax.

131
SERVICE CHARGES FOR TAX COLLECTED OR
DEDUCTED – Section 168
“Service charges for collecting or deducting tax at source” – A
withholding agent is not authorized to charge and deduct any amount
on account of service charges for acting as a withholding agent from
tax collected or deducted at source.
Any service charges deducted by the withholding agent is treated as
payable to the Federal Government and all the provisions of the
Ordinance applicable to recovery of tax also apply for recovery of such
service charges deducted by a withholding agent.

132
3rd Session (Part-I)
Related Q & A

133
WITHHOLDING SALES TAX
3rd Session (Part – II)
Definitions – Relevant for today's workshop
Scope of withholding tax
Exemptions
Issues and clarifications required
Obligations of withholding agent:
 Certificate of deduction of tax
 Furnishing of return
 Payment of tax deducted
 Method of furnishing the return / withholding statement
Related Q & A

134
“Distributor”
“Retailer”
“Taxable goods”
“Taxable supply”
“Wholesaler”
DEFINITIONS
PRINT OUT SEPARATELY PROVIDED

135
SALES TAX – Sales Tax Special Procedure
(Withholding) Rules, 2007
Person(s) liable
to deduct tax
• Federal Government departments;
• Provincial Government departments;
• Autonomous Bodies;
• Public Sector Organization;
• Company (as defined under Income Tax
Ordinance, 2001) registered for Sales Tax or
Federal Excise Duty or Income Tax;
• Recipients of services of advertisement registered
for Sales Tax;
• Persons registered as exporters;
From whom Suppliers of taxable goods and services whether
registered under the Sales Tax, 1990 or not.
Continued

136
Rate
(where the
supplier is
registered
under the Sales
Tax, 1990)
20.00%* - Where the supplier is registered under the
Sales Tax Act, 1990 [other than as a
wholesaler, dealer (including petroleum
dealers) or distributor] and the “sales tax
withholding agent” is other than recipients
of services of advertisement.
10.00%* - Where the supplier is a registered as a
wholesaler, dealer (including petroleum
dealers) or distributor under the Sales Tax
Act, 1990.
Rate
(where the
supplier is
registered
under the Sales
Tax, 1990)
100%* - Where the supplier is registered under the
Sales Tax Act, 1990 and the “sales tax
withholding agent” is the recipient of
services of advertisement.
Continued

137
Rate
(where the
supplier is NOT
registered under
the Sales Tax,
1990)
100%* - Where the withholding agent is the Federal
or Provincial Government Department,
Autonomous Body or Public Sector
Organization and holds Free Tax Number
(FTN) on purchase of taxable goods from
persons liable to be registered but not
actually registered.
1.00%**- Where the withholding agent is other than
stated above, on purchase of taxable goods
from persons liable to be registered but not
actually registered.
100%* - Where the withholding agent is the recipient
of advertisement services.
Continued

138
On* • Amount of Sales Tax charged/shown on the Sales
Tax Invoice by the supplier registered under the
Sales Tax Act, 1990.
• Amount of sales tax applicable on the gross value of
taxable supply where the supplier is not registered
under the Sales Tax, 1990.
On** • Gross value of taxable supply.
When At the time of making the payment
Input Tax Credit A withholding agent is not entitled to claim input tax in
respect of tax deducted from a person liable to be
registered but not actually registered.
Continued

139
Exemption from
deduction of
Sales Tax on
supply of
following goods
and services by
persons
registered
under the
Sales Tax Act,
1990.
• Electrical energy;
• Natural gas;
• Petroleum products supplied by petroleum
production and exploration companies, oil refineries
and oil marketing companies;
• Mild steel products;
• Products made from sheets of iron or non-steel
alloy, stainless steel or other alloy steel, such as
pipes, almirahs, trunks, etc.;
• Papers in rolls or sheets;
• Plastic products including pipes;
• Vegetable ghee and cooking oil;
• Telecommunication services;
• Goods specified in the 3rd Schedule to the Sales
Tax Act, 1990; and
• Supplies made by commercial importers who have
paid value addition tax on such goods at the time of
import.
Continued

140
Issues or
clarifications
required.
• How and who will determine whether a person
making supply of taxable goods is liable to be
registered or not. Clarification issued by FBR vide
C. No. 3(10)ST-L&P/07 dated August 11, 2014.

141
SALES TAX WITHHOLDING AGENTS
OBLIGATIONS
Certificate of
deduction of
sales tax
Every sales tax withholding agent (person obliged
deduct sales tax at source) deducting sales is obliged to
issue certificate of sales tax deducted, to the person
from whom such tax has been deducted.
No specific format of this certificate has been
prescribed. However, such certificate should specify the
name and registration number, if any, of the supplier,
description of goods and the amount of sales tax
deducted.

142
OBLIGATIONS
Furnishing of
return of sales
tax and deposit
of sales tax
deducted at
source
(withheld)
Sales tax deducted at source (withheld) during a
calendar month by the “sales tax withholding agent” is
payable to the credit of the Federal Government by 15th
of the following month.
Where the “sales tax withholding agent is registered
under the Sales Tax Act, 1990 or Federal Excise Act,
2005 the sales tax deducted at source (withheld) is to
be reported in the monthly sales tax–cum–federal
excise return for which appropriate space is provided in
the said monthly return and is paid/adjusted by way of
addition to the output tax.
Continued

143
OBLIGATIONS
Furnishing of
return of sales
tax and deposit
of sales tax
deducted at
source
(withheld)
Where the “sales tax withholding agent is not
registered under the Sales Tax Act, 1990 or Federal
Excise Act, 2005 the sales tax deducted at source
(withheld) is to be reported through a special monthly
sales tax return for withholding agents and is payable:
• Where the “sales tax withholding agent” is
registered under the Income Tax Ordinance, 2001
(hold a National Tax Number (NTN)) in the like
manner as sales tax due is payable by a person
registered under the Sales Tax Act, 1990; and
• Where the “sales tax withholding agent” is not
registered under the Income Tax Ordinance, 2001
the sales tax deducted at source (withheld) is to
be paid directly in the State Bank of Pakistan or
designated branches of National Bank of Pakistan
through the said special monthly sales tax return
for withholding agent.
Continued

144
OBLIGATIONS
E-filing of return
of Sales Tax
deducted at
source (withheld)
e-filing of sales tax return and special sales tax return
for “sales tax withholding agents” is mandatory for all
except where the “sales tax withholding agent” is not
registered under the Sales Tax Act, 1990, Federal
Excise Act, 2005 and Income Tax Ordinance, 2001

145
WITHHOLDING SALES TAX
3rd Session (Part – II)
Related Q & A

148
CROSS INDEX
WITHHOLDING AGENT WISE
Persons liable to collect or deduct tax
(Withholding agents)
Applicable sections
Airlines issuing air travel tickets 236B, 236L
Association of persons constituted by, or under,
law
152(2A), 153(1), 233
Association of Persons having turnover of fifty
any subsequent tax year
152(2A), 153(1)
Association of Persons paying rent of Rs.
1,500,00 or more
155
Authorized dealer in foreign exchange 154(1), 154(2), 231AA
Banking Company 151(1)(b), 151(1)(d),
154(3), 231A, 231AA
Beauty parlor 155

149
CROSS INDEX
Applicable sections
Body corporate formed by or under any law in
force in Pakistan
151(1)(d)
Boutique 155
Charitable institution 155
Clinic 155
Collector of Customs 148, 154(3C)
Commercial importer of electronics, sugar,
cement, iron and steel products, fertilizer,
motorcycles, pesticides, cigarettes, glass, textile,
beverages, paint or foam sector
236G, 236H
Company as defined under the Companies
Ordinance, 1984
151(1)(d)

150
CROSS INDEX
Applicable sections
Company as defined under the Income Tax
Ordinance, 2001
153(1), 152(2A), 155,
233
Consortium or a joint venture 152(2A), 153(1)
Dealer of electronics, sugar, cement, iron and
steel products, fertilizer, motorcycles, pesticides,
cigarettes, glass, textile, beverages, paint or foam
sector
236H
Diplomatic mission of a foreign state 155
Direct Exporter 154(3B)
Distributor of electronics, sugar, cement, iron and
steel products, fertilizer, motorcycles, pesticides,
cigarettes, glass, textile, beverages, paint or foam
sector
236H

151
CROSS INDEX
Applicable
sections
Educational institution 236I
Exchange company 231AA
Excise and taxation departments of a Provincial
Government
231B
Export House 153(1A)
Export House registered under the Duty and Tax
Remission for Export Rules, 2001 of Customs Rules
154(3B)
Export Processing Zone Authority 154(3A)
Exporter 153(1A)
Federal Government 151(1)(c), 152(2A),
153(1), 155, 233
Finance society 151(1)(d)
Financial Institution 151(1)(b), 151(1)(d)

152
CROSS INDEX
Applicable sections
Foreign contractor or consultant 152(2A), 153(1)
Hospital 155
Individual paying rent of Rs. 1,500,00 or more 155
Individual having turnover of fifty million rupees or
more in the tax year 2009 or in any subsequent
tax year
152(2A), 153(1)
Licensing authority certifying any foreign TV
drama serial or a play for screening and viewing
on any landing rights channel
236E
Local Government 151(1)(c), 155, 233
Manufacturer of electronics, sugar, cement, iron
and steel products, fertilizer, motorcycles,
pesticides, cigarettes, glass, textile, beverages,
paint or foam sector
236G, 236H

153
CROSS INDEX
Applicable sections
Manufacturer of motor car or jeep 231B
“Market committee” 236J
Maternity home 155
Motor Vehicle Tax Collection Authority 234
NCCPL (National Clearing Company of Pakistan
Limited)
233AA
Non-banking financial institutions 231AA
Non-profit organization 152(2A), 153(1), 155
Owner, a lease-holder, an operator or a manager
of a marriage hall, marquee, hotel, restaurant,
commercial lawn, club, a community place or any
other place used for holding a “function”
236D
Pakistan Electronic Media Regulatory Authority 236F

154
CROSS INDEX
Applicable sections
Pension Fund Manager 156B
Person 150, 152(1), 152(1A),
152(1AA), 152(1AAA),
152(2), 156
Person making sale by public auction or auction
by a tender
236A
Person paying profit on debt on National Saving
Schemes of Directorate of National Savings or
Post Office Saving Account
151(1)(a)
Person preparing gas consumption bills 234A
Person preparing telephone bills or selling
prepaid telephone cards
236

155
CROSS INDEX
Applicable sections
Person preparing electricity consumption bills 235, 235A, 235B
Person registered under the Sales Tax Act, 1990 152(2A), 153(1)
Persons responsible for registering or attesting
transfer of immovable property
236C, 236K
Persons responsible for paying salary 149
Person selling petroleum products to petrol pump
operators
156A
Private educational institution 155
Provincial Government 151(1)(c), 155, 233
Stock Exchanges Registered in Pakistan 233A
Wholesaler of electronics, sugar, cement, iron
and steel products, fertilizer, motorcycles,
pesticides, cigarettes, glass, textile, beverages,
paint or foam sector
236H

156
DEFINITIONS
“Association of persons” includes a firm, a Hindu undivided family, any
artificial juridical person and any body of persons formed under a foreign
law, but does not include a company.
“Banking company” means a banking company as defined in the
Banking Companies Ordinance, 1962 (LVII of 1962) and includes any
body corporate which transacts the business of banking in Pakistan.
Back

157
DEFINITIONS
“Company” means –
• A company as defined in the Companies Ordinance, 1984 (XLVII of
1984);
• A body corporate formed by or under any law in force in Pakistan;
• A modaraba;
• A body incorporated by or under the law of a country outside
Pakistan relating to incorporation of companies
• A trust;
• A co-operative society;
• A finance society;
• Any other society;
• An entity or body of persons established or constituted by or under
any law for the time being in force;
• A non-profit organization;
• A foreign association, whether incorporated or not, which the Board
has, by general or special order, declared to be a company for the
purposes of this Ordinance;
• A Provincial Government; or
• A Local Government in Pakistan.
ContinuedBack

158
DEFINITIONS
“Employee” means any individual engaged in employment.
“Employer” means any person who engages and remunerates an
employee.
“Employment” includes –
(a) a directorship or any other office involved in the management of a
company;
(b) a position entitling the holder to a fixed or ascertainable
remuneration; or
(c) the holding or acting in any public office
“Filer” means a taxpayer whose name appears in the active taxpayers’
list issued by the Board from time to time or is holder of a taxpayer’s
card.
“Non-filer” means a person who is not a filer.
Back

159
DEFINITIONS
Back
“Industrial undertaking” means –
• an undertaking which is set up in Pakistan and which employs,
– Ten or more persons in Pakistan and involves the use of electrical
energy or any other form of energy which is mechanically
transmitted and is not generated by human or animal energy; or
– Twenty or more persons in Pakistan and does not involve the use of
electrical energy or any other form of energy which is mechanically
transmitted and is not generated by human or animal energy;
and which is engaged in:
– the manufacture of goods or materials or the subjection of goods or
materials to any process which substantially changes their original
condition;
– Ship-building;
– Generation, conversion, transmission or distribution of electrical
energy, or the supply of hydraulic power; or
– The working of any mine, oil-well or any other source of mineral
deposits; and
• any other industrial undertaking which the Board may by notification in
the official Gazette, specify.

160
DEFINITIONS
“Permanent establishment” means, a fixed place of business through
which the business is wholly or partly carried on, and includes –
………….
“Person” for the purposes of the Ordinance means:-
(a) An individual;
(b) An association of persons incorporated, formed, organized or
established in Pakistan or elsewhere;
(c)A company incorporated, formed, organized or established in
Pakistan or elsewhere;
(d) The Federal Government,
(e) A foreign government,
(f) A political subdivision of a foreign government, or
(g) Public international organization
Back

161
DEFINITIONS
“Profit on a debt” whether payable or receivable, means–
• Any profit, yield, interest, discount, premium or other
amount, owing under a debt, other than a return of capital; or
• Any service fee or other charge in respect of a debt,
including any fee or charge incurred in respect of a credit facility
which has not been utilized.
“Debt” means any amount owing, including accounts payable and the
amounts owing under promissory notes, bills of exchange, debentures,
securities, bonds or other financial instruments.
Back

162
DEFINITIONS
“Public company” means –
• a company in which not less than fifty per cent of the shares are
held by the Federal Government or Provincial Government;
• a company in which not less than fifty per cent of the shares are
held by a foreign Government, or a foreign company owned by a
foreign Government;
• a company whose shares were traded on a registered stock
exchange in Pakistan at any time in the tax year and which
remained listed on that exchange at the end of that year; or
• a unit trust whose units are widely available to the public and any
other trust as defined in the Trusts Act, 1882.
Note: The definition of ‘Public Company’ under the Income Tax
Ordinance, 2001 is different from one generally under stood
or as defined under the Companies Ordinance, 1984.
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163
DEFINITIONS
“Residential status” (where a person resides in a tax year) is of great
importance for the purposes of income Ordinance, 2001. Basically there
are two categories of residential status, namely:
• Resident; and
• Non-Resident
The Federal Government is resident.
An ”individual” is resident in a tax year if he/she is:
• Present in Pakistan for 183 days or more in that tax year; or
• An employee or official of the Federal or a Provincial
Government posted abroad in that tax year.
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164
DEFINITIONS
An association of persons is “resident” in a tax year if the control and
management of the affairs of the association is situated wholly or partly in
Pakistan at any time in the year.
A company is “resident” in a tax year if:
• it is incorporated or formed by or under any law in force in Pakistan;
• the control and management of the affairs of the company is situated
wholly in Pakistan at any time in the year; or
• it is a Provincial Government or Local Government in Pakistan.
An individual, an association of persons and a company is “non-
resident” in a tax year if he/she/it is not a resident for that tax year.
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165
DEFINITIONS
“Salary” means any amount received by an employee from any
employment, whether of a revenue or capital nature, including -
• Pay, wages or other remuneration, including leave pay,
payment in lieu of leave, overtime payment, bonus, commission,
fees, gratuity or work condition supplements (such as for unpleasant
or dangerous working conditions);
• Perquisites, whether convertible to money or not;
• Allowances including cost of living, subsistence, rent, utilities,
education, entertainment or travel allowance, but excluding any
allowance solely expended in the performance of the duties of
employment;
• Expenditure incurred by an employee that is paid or reimbursed by
the employer, other than expenditure incurred on behalf of the
performance of the duties of employment;
• Benefit under ‘Employee Share Scheme’ (Section 14).
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166
DEFINITIONS
• Profits in lieu of, or in addition to, salary or wages, including:
– Consideration for an agreement to enter into an employment
relationship;
– Consideration for an agreement to any conditions or changes to
the conditions of employment;
– Retirement or termination benefits, whether paid voluntarily or
under an agreement, including any compensation for
redundancy or loss of employment and golden handshake;
– Any amount from a provident or other fund, to the extent to
which it is not a repayment of contributions made by the
employee; and
– Consideration for an employee’s agreement to a restrictive
covenant in respect of any past, present or prospective
employment;
• Pension or annuity, or any supplement to a pension or
annuity; and
• Income tax payable on salary where the employer agrees to pay the
Income tax payable
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167
DEFINITIONS
“Tax Year”
“Normal tax year” is a period of twelve months ending on 30th day of
June and is denoted by the calendar year in which the said date falls.
For example, tax year for the period of twelve months from July 01, 2011
to June 30, 2012 shall be denoted by calendar year 2012 and the period
of twelve months from July 01, 2012 to June 30, 2013 shall be denoted
by calendar year 2013.
“Special tax year” is any period of twelve months (subject to certain
conditions and restrictions) and is denoted by the calendar year relevant
to the normal tax year in which closing date of the special tax year falls.
For example, tax year for the period of twelve months from January 01,
2011 to December 31, 2011 shall be denoted by calendar year 2012 and
the period of twelve months from October 01, 2011 to September 30,
2012 shall be denoted by calendar year 2013.
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168
DEFINITIONS
“Turnover” (for the purposes of section 153) means, –
• The gross sales or gross receipts, inclusive of sales tax and federal
excise duty or any trade discounts shown on invoices, or bills,
derived from the sale of goods;
• The gross fees for the rendering of services for giving benefits
including commissions;
• The gross receipts from the execution of contracts; and
• The company’s share of the amounts stated above of any
association of persons of which the company is a member.”
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169
IMPORT OF GOODS
Section 148
Clarifications:
1. Importers of goods belonging to tribal areas etc. are also liable for
collection of tax on goods imported by them. However, since
Income Tax Ordinance, 2001 does not extend to tribal areas etc.,
they can claim the refund of such tax collected from them (certain
restrictions apply) [Circular Letter C. No. 63(I)/IT-6/80 dated
November 27, ?????.
2. In case of importers of Azad Kashmir, the Customs authorities in
Pakistan shall honour the certificate issued by the Commissioner,
Azad Jammu and Kashmir, to the effect that such importer has paid
the tax due as required by this section in designated branches of
National Bank of Pakistan in Azad Jammu and Kashmir, alongwith
a copy of such tax paid deposit receipt (challan) [Circular No. 13 of
1998 dated October 02, 1998]
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