Withholding Tax – Part I

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Withholding Tax – Part I

Withholding Tax
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Withholding is the tax under which tax deducted or collected at source is treated as a minimum tax for such transaction.

This tax becomes final tax when withholding tax is higher than normal tax, otherwise, adjustable in normal tax.

Withholding Tax deducted on services – Section 153 Division III (2) Part III 1st Schedule

Prescribed Services – Section 153(1) b:

The tax on gross amount including sales tax shall be deducted according to the below table for the following prescribed services;

List of Prescribed Services

  • Transport Services
  • Freight and forwarding services
  • Air Cargo Services
  • Courier Services
  • Manpower Outsourcing
  • Hotel Services
  • Security Services
  • Software Development
  • Tracking Services
  • IT & IT enabled services As per Clause (133) of Part I 2nd Schedule
  • Advertisements other than print or electronic media
  • Share Registrar Services
  • Engineering services including architectural services
  • Car Rental Services
  • Building Maintenance Services
  • Services rendered by asset management companies
  • Data services under license by Pakistan Telecommunication Authority (PTA)
  • Telecommunication infrastructure (tower) services
  • Services rendered by Pakistan Stock Exchange (PSX) and Pakistan Mercantile Exchange Ltd.
  • Inspection, certification, testing and training services
  • Oilfield services
  • Collateral management services
  • Travel and tours services
  • REIT management services
  • Services rendered by National Clearing Company of Pakistan (NCCPL)

Withholding tax on Other Services:

Tax on gross amount including sales tax, other than the above services shall be deducted according to the below table;

Withholding Tax Table for tax rates for Prescribed Services and Other Services:

Applicable section Nature Filer Non-Filer
Prescribed Services u/s 153(1)(b)/21 AOP 3.00% 6.00%
Prescribed Services u/s 153(1)(b)/21 Individuals 3.00% 6.00%
Prescribed Services u/s 153(1)(b)/21 Company 3.00% 6.00%
Other Services u/s 153(1)(b)/4 Company 8.00% 16%
Other Services 153(1)(b)/5 AOP 10.00% 20%
Other Services 153(1)(b)/5 Individuals 10.00% 20%
Other Media Advertising Services u/s 153(1)(b)/11 Media 1.50% 3%

Withholding tax shall be deducted by the following persons;

  • Federal Government, Provincial Government, Local Government
  • Company, Non-profit organization, AOP
  • Individuals and AOP and a person registered under the sales tax act have a turnover of Rs.100 million or above in any preceding years.
  • Foreign Contractors or consultants
  • Consortium or joint venture
  • Builder and land developers

Withholding tax on print or electronic media:

Tax @1.5% shall be deducted including sales tax.

Threshold Rs.30,000:

Where payment to the service provider is less than Rs.30,000 aggregate during a financial year no tax shall be deducted.


Payments to the following are exempted from the provisions of section 153;

  • To the Provincial government, local authority.
  • For electricity and gas.
  • To Hotels and restaurants receiving payment in cash.
  • Shipping companies and air carriers for passenger tickets and cargo charges of goods.

Payments to non-resident media person – Section 152(1AAA)

Every person making a payment of advertisement services to a non-resident media person relying from outside Pakistan shall deduct tax from the gross amount @10%.

This tax shall be considered as the minimum tax liability of the recipient.

Advance tax on TV plays and advertisements – Section 236CA, Division XA part IV 1st Schedule

Advance tax considered as minimum tax on following;

Foreign produced TV drama Serial or play Rs.1 million per episode
Foreign produced TV play (per episode) Rs.3 million
Advertisement starring foreign actor Rs.100,000 per second

Second Part

Withhoding Tax – Part II

FBR Website

Please also read:

Final Tax Regime Part I

Income from Property


Ali Murtaza

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