Withholding Tax In Pakistan

Withholding Taxes are the major source for collection of revenue by Federal Govt in Pakistan. Every Year withholding Tax collection is rising as Federal Govt is imposing new withholding Taxes as new businesses are getting registered with their multiple principle activities. Withholding Taxes are the most important part of taxation system which provides taxpayer chance to pay their taxes in instalments on monthly basis.

These are collected at source which generally a type of advance tax payment. This is quite comprehensive tool of Federal Govt to get timely collection of revenue. A Withholding Tax in Pakistan is been deducted from the income of the Taxpayer. Common example of the Withholding tax is employment income, withholding taxes on supply of goods and services, withholding Taxes on Dividends, Withholding Taxes on issuance of Banking instrument and Cash withdrawal, Withholding Taxes on Telephone and Mobile Phones, Withholding Taxes Contractual Income, Commission and Profit on debts etc.

Withholding Tax in Pakistan is normally treated as final tax liability of taxpayer when taxes are deducted in advance. If Taxpayer deposit additional withholding taxes as per his Tax liability during the filing of Income Tax Return, then additional taxes may be refunded back to Taxpayer or can be adjusted against Tax liability arises in future depending on Taxpayers circumstances.

In some circumstances withholding tax is used for discharging the Taxpayers liability which is normally called as Final Discharge of Liability, there is no additional tax is required. Withholding Taxes in Pakistan paid on salaried income are not fixed in nature because it may change according the Income earned during the year and other than employment withholding Taxes normally fixed percentages which applied on difference types of income of Taxpayer.

Withholding Statements

All withholding agents who is deducting Withholding Taxes from Taxpayers are liable to file monthly withholding Statement before 15th Day of every month. Employer filed his withholding statements for taxes which are deducted from employees every month and other than employment withholding statements are filed on the basis of taxes which are deducted on other than salary like contracts, services, supply of goods, dividends, commission etc.

Penalty For Non Filing Of Withholding Statement

Withholding agents who deduct withholding taxes are liable to file in time monthly withholding statement. In Case if they are not successful to file withholding statement in time penalty shall be imposed as per rates defined in Income Tax Ordinance, 2001. We at Tax care are available to help and advice you on filing of withholding statements with expert opinions and best possible solutions.

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