Introduction

The resident withholding tax rate is applied in accordance with the Division III of Part III of the First Schedule of the Income Tax Ordinance, 2001.

Categorywise Resident Withholding Tax Rate

Resident withholding tax rates under Section 153 of the Income Tax Ordinance, 2001 are as given below:

Description	Categories	Rate
Goods-Section 153(1)(a)	Sale of rice, cottonseed, edible oil	1.5%
	Other Goods Company Other than Company	5% 5.5%
Services-Section 153(1)(b)	Transport services, freight forwarding services, air cargo services, courier services, manpower outsourcing services, hotel services, security guard services, software development services, IT services and IT enabled services as defined in section 2, tracking services, advertising services (other than by print or electronic media), share registrar services, engineering services including architectural services, warehousing services, services rendered by asset management companies, data services provided under a license issued by the Pakistan Telecommunication Authority, telecommunication infrastructure (tower) services, car rental services, building maintenance services, services rendered by Pakistan Stock Exchange Limited and Pakistan Mercantile Exchange Limited, inspection, certification, testing and training services, oilfield services, telecommunication services, collateral management services, travel and tour services, REIT management, services, services rendered by National Clearing Company of Pakistan Limited.	4%
	Other Services Company AOP and Individuals Advertising Services	9% 11% 1.5%
Contracts-Section 153(1)(c)	Sportsperson	10%
	Company	7.5%
	Other Cases	8%

 

• The resident withholding tax rate under Section 153 is applicable on the gross value i.e. including sales tax. For example, if the value of supplies excluding sales tax is Rs. 100,000 and the sales tax is          Rs. 18,000. The withholding tax will be calculated on value including sales tax i.e. Rs. 118,000.
• If the name of the payee is not appearing in the Active Tax Payers List (ATL), the resident withholding tax rate under Section 153 will be increased by 100%. For instance, if an individual supplies goods to a prescribed person and the name of the supplier does not appear in the ATL. The prescribed person will withhold tax @11% instead of 5.5%.