Pakistan — Withholding Tax — Skill v1.0

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Section 1 — Quick reference (rate table by section)

Field	Value
Country	Islamic Republic of Pakistan
Tax covered	Withholding Tax (WHT) under the Income Tax Ordinance 2001 — advance and final income tax collected at source on a very wide range of payments and transactions
Currency	Pakistani Rupee (PKR, Rs) — foreign-currency payments converted at the SBP interbank rate on the date of payment unless the contract specifies otherwise
Tax year	1 July to 30 June (financial year)
Current tax year	TY 2025-26 (Finance Act 2025) — rates below reflect FA 2025 amendments; verify the current First Schedule and Division provisions on FBR website before relying
Federal tax authority	Federal Board of Revenue (FBR) — operates through Inland Revenue Field Offices (LTUs, MTUs, RTOs)
Filing portal	IRIS (https://iris.fbr.gov.pk) — for all WHT statements, returns, payment challans, and exemption certificate applications
Payment instrument	CPR (Computerized Payment Receipt) — generated by the bank upon deposit of WHT via a PSID (Payment Slip ID) created on IRIS
Monthly statement	Section 165 withholding statement — filed monthly through IRIS by every withholding agent listing every deduction made in the month
Annual reconciliation	Annual Section 165 reconciliation statement
ATL impact	Recipients not on the Active Taxpayers List published weekly by FBR pay penal rates under the Tenth Schedule — typically 2x the standard rate, and up to 3x for certain categories
WHT credit	Tax deducted under most sections (Section 153 services, 153 goods adjustable, 155 rent, 148 imports adjustable, etc.) is creditable against the recipient's annual income tax liability; tax deducted under "final tax regime" (FTR) sections (e.g. 150 dividends, 151 profit on debt for individuals, 152(1) royalties/fees for technical services to non-residents, some 153 goods, 156 prizes) is final and not refundable
Governing law	Income Tax Ordinance 2001 as amended by Finance Act 2024 and Finance Act 2025; Income Tax Rules 2002; Tenth Schedule (ATL/non-ATL rates); First Schedule (rates of tax)
Validated by	Pending — requires sign-off by a qualified Pakistan tax practitioner (ICAP-registered Chartered Accountant or ICMAP-registered Cost & Management Accountant or FBR-registered Income Tax Practitioner)
Skill version	1.0

Quick-look: section → payment type → rate (filer vs non-filer)

All rates below are stated "as per Finance Act 2025 — verify current text." WHT rates in Pakistan change with virtually every Finance Act. Where uncertainty exists, default to the higher (non-filer) rate and flag for verification.

Section	Payment type	Filer (ATL) rate	Non-filer (non-ATL) rate	Adjustable / Final
148	Imports (commercial importer)	5.5% (general goods, value-based)	11%	Adjustable for most goods; minimum tax for some categories
148	Imports (industrial undertaking — raw materials for own use)	1% – 5.5% per item category	2x	Adjustable
149	Salary	Progressive slab (0% to 35% for income above Rs 4.1m for non-salaried; salaried slabs separate)	n/a (employer withholds per slabs)	Adjustable against annual tax
150	Dividends — general	15%	25%	Final for most recipients
150	Dividends — IPP / mutual fund / REIT (special categories)	7.5% – 25% per category	2x	Final
151	Profit on debt (bank deposits, savings certificates, bonds)	15% (where yield exceeds Rs 5m, higher rates apply)	30%	Final for individuals up to threshold; adjustable for companies
152(1)	Royalty / fee for technical services to non-resident	15% (treaty cap may apply)	15%	Final (subject to treaty)
152(1A)	Non-resident contract execution (construction, assembly, services in PK)	7% (PE-attributable)	14%	Final / minimum tax depending on election
152(2)	Other payments to non-residents (general)	10% – 20% per nature	2x	Generally final
152(2A)	Payments to non-resident for services rendered to PE	7% – 15%	2x	Adjustable / final per election
153(1)(a)	Sale of goods — to company	4.5%	9%	Adjustable (companies); minimum tax for many cases
153(1)(a)	Sale of goods — to individuals / AOPs	5.5%	11%	Minimum tax for many categories
153(1)(b)	Rendering of services — general	11%	22%	Minimum tax (effectively final at the rate but creditable beyond it)
153(1)(b)	Services — specified low-margin sectors (transport, freight forwarding, security, etc.)	4%	8%	Minimum tax
153(1)(c)	Execution of contracts (construction, supply contracts)	7%	15%	Minimum tax / adjustable
153(2)	Sportspersons	10%	20%	Final
155	Rent of immovable property — individuals / AOPs	Slab: 0% up to Rs 300k, then 5% / 10% / 15% / 25% on higher slabs	2x	Adjustable
155	Rent of immovable property — companies	15% flat	30%	Adjustable
156	Prizes and winnings — prize bonds	15%	30%	Final
156	Prizes and winnings — raffle, lottery, quiz	20%	40%	Final
156A	Petroleum products commission to petrol pump operators	12%	24%	Final
156B	Withdrawal of pension fund balance	Varies	2x	Final
231A	Cash withdrawal from bank (non-ATL only, above Rs 50k/day)	n/a (filers exempt)	0.6%	Adjustable
231B	Purchase / transfer of motor vehicles	Slab by engine capacity / value	2x – 3x	Adjustable
234	Motor vehicle tax (collected with token)	Slab	2x	Adjustable
235	Electricity consumption — commercial / industrial	Slab on monthly bill	2x for non-filers	Adjustable up to threshold; minimum tax above
236	Telephone and internet subscribers	Varies	n/a	Adjustable / final
236A	Sale by auction	10%	20%	Adjustable
236C	Sale / transfer of immovable property — seller	3% (filer)	6% (non-filer)	Adjustable; final if holding period > 6 yr in some cases
236K	Purchase of immovable property — buyer	3% (filer)	10.5% (non-filer + late filer cascade)	Adjustable
236G/H	Sales to distributors / retailers (specified sectors)	0.1% – 2%	2x	Minimum tax

Critical rule (Section 158). WHT must be deducted at the time the amount is actually paid OR when credited to the account of the recipient, whichever is earlier. The base is the gross amount excluding sales tax (where Pakistan federal/provincial sales tax has been charged separately on the invoice — strip the sales tax before computing income WHT).

Critical rule (Tenth Schedule, ATL regime). Before applying any rate, the withholding agent must check the weekly Active Taxpayers List (ATL) published by FBR (and the provincial ATLs for sales tax purposes) on the FBR website. If the recipient's NTN/CNIC does not appear on the ATL on the date of payment, the higher non-filer rate applies. Print or screenshot the ATL check as part of the working paper.

Critical rule (Section 159 exemption certificate). A recipient may apply on IRIS for a reduced-rate or exemption certificate. The certificate must be on hand at the date of payment — verbal claims do not suffice. The certificate is section-specific and time-bound.

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Section 2 — Required inputs and refusal catalogue

2.1 Mandatory inputs before any WHT computation

Refuse to compute Pakistan WHT without ALL of the following:

Input	Why it matters
Withholding agent identity, NTN (National Tax Number), entity type (company, AOP, individual, government department, PE of non-resident)	Determines whether obligation arises under Section 153 (only "prescribed persons" are agents under 153), and reporting cadence
Recipient legal name, CNIC (if individual) or NTN (if company/AOP), and tax residence	Determines resident-vs-non-resident regime and ATL status
ATL status of recipient at the date of payment — screenshot of FBR ATL search	Drives filer vs non-filer rate (typically 2x for non-ATL)
Nature of the payment (goods, services, contract, rent, dividend, profit on debt, royalty, FTS, prize, commission, brokerage, sale by auction, immovable property, vehicle, etc.)	Drives section and rate
Whether the recipient holds a Section 159 exemption / reduced-rate certificate, and certificate copy	Without certificate on hand, full rate applies even if recipient is eligible
Gross invoice amount, broken down between price and sales tax (federal STA 1990 or provincial SST)	WHT base excludes sales tax
Date of payment OR accrual, whichever is earlier	Tax point under Section 158
For non-resident recipients claiming treaty relief: Tax Residence Certificate (TRC) and Form 10F-equivalent declaration	Treaty relief denied without TRC on hand at payment date
For Section 153 services to specified low-margin sectors (transport, freight forwarding, security, etc.): documentary evidence of sector classification	Drives the reduced 4% / 8% rate vs general 11% / 22%
For Section 148 imports: H.S. code, customs assessed value, and import status (commercial vs industrial own-use)	Drives rate band in the First Schedule
Bank account details for PSID generation (NTN of withholding agent and head of account)	Required to generate the PSID and obtain the CPR

2.2 Refusal catalogue

Refuse the engagement (explicit refusal, do not guess) in any of the following cases:

#	Situation	Reason
R-PK-WHT-1	Provincial sales tax on services WHT (Sindh SST, Punjab PST, KPK and Balochistan SST, Islamabad ICT-ST)	Distinct provincial regimes; route to pakistan-sales-tax.
R-PK-WHT-2	Workers Welfare Fund (WWF) and Workers Profit Participation Fund (WPPF)	Separate labour-law levies; refer to a Pakistan tax practitioner.
R-PK-WHT-3	Federal Excise Duty mechanics	Distinct regime under Federal Excise Act 2005.
R-PK-WHT-4	Customs duty, regulatory duty, additional customs duty on imports beyond the Section 148 income-tax slice	Customs Act 1969 — refer to a licensed customs clearing agent.
R-PK-WHT-5	Bespoke SRO (Statutory Regulatory Order) exemption claims without sight of the actual SRO	SROs are tightly drafted and time-bound; refuse without the document.
R-PK-WHT-6	Treaty rate claim without a valid TRC dated on or before the payment date	Apply statutory non-resident rate.
R-PK-WHT-7	Section 152(1A) PE-attribution and election questions for non-resident contractors	Requires PE analysis under Section 6 + treaty Article 5; refer to a Pakistan tax practitioner.
R-PK-WHT-8	Final-Tax-Regime vs Normal-Tax-Regime classification dispute (whether a payment is FTR or NTR for the recipient's annual return)	Requires recipient-level analysis; refer to a Pakistan tax practitioner.
R-PK-WHT-9	Petroleum, banking, insurance, power sector, IPP, REIT, mutual fund specials beyond the headline rate	Sector-specific Schedules to ITO 2001 (Second, Third, Fourth, Fifth, Seventh, Eighth Schedules) — refer to specialist.
R-PK-WHT-10	Tax credit refund applications and IRIS dispute resolution beyond a routine reconciliation	Refer to a Pakistan tax practitioner / FTO.
R-PK-WHT-11	Cross-jurisdictional WHT split where the same payment touches federal income WHT and provincial sales-tax WHT	Coordinate with pakistan-sales-tax skill but refuse to issue a combined determination without provincial confirmation.

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Section 3 — Tier 1: common sections

3.1 Section 148 — Imports

Trigger. Any import of goods into Pakistan cleared through Customs.

Mechanics.

• WHT is collected by the Collector of Customs at the time of clearance — the importer does not "withhold" in the usual sense; the duty/tax is paid at port via the customs assessment.
• Rate is per the First Schedule, Part II — varies by H.S. code, commercial vs industrial-undertaking-for-own-use status, and ATL status.
• General commercial import: 5.5% (filer) / 11% (non-filer) on the customs-assessed value plus customs duty plus federal excise (the "import value" for tax purposes).
• Industrial undertaking importing raw materials for its own use: typically 1% – 5.5% depending on the item category (lower for capital goods and raw materials of priority sectors).
• WHT under 148 is adjustable against the importer's annual income tax for most categories, but is treated as minimum tax for certain finished-goods imports under SRO regimes — verify per current SRO.
• The CPR for Section 148 is the Goods Declaration (GD) assessment showing the WHT line item.

Working paper. Capture the GD number, the H.S. code, the assessed import value, customs duty, FED if any, ATL status of the importer, and the WHT line on the GD assessment.

3.2 Section 149 — Salary

Trigger. Any payment of salary by an employer to an employee resident or non-resident, where the salary is sourced in Pakistan.

Mechanics.

• Employer must compute the estimated annual tax liability of the employee at the start of the tax year (or on joining), divide by 12, and withhold a 1/12 share each month.
• Salary slabs are progressive and are re-set every Finance Act. For TY 2025-26 (per FA 2025 — verify), salaried slabs run from 0% (income up to Rs 600k) through progressive bands up to a top marginal rate of 35% (salaried) on income above the topmost threshold.
• Non-salaried (business / AOP / individual professional) slabs are different and reach 35% above the top threshold.
• The employer adjusts during the year if salary, allowances, bonuses, or tax credits change.
• Tax credits available against the Section 149 withholding (employee must inform employer in writing):
  • Section 60C — interest on house loan
  • Section 61 — donations to approved institutions
  • Section 63 — voluntary pension fund contributions
  • Section 62 — investment in shares / mutual funds / Sukuks (capped)
• Salary WHT is adjustable — credited against the employee's annual return liability.
• Section 149(1)(b) requires the employer to issue annual salary certificate to the employee on Form annexed to the rules.

3.3 Section 150 — Dividends

Trigger. Distribution of dividends by a Pakistan-resident company (or a non-resident company on Pakistan-source profits subject to s.5).

Mechanics.

• Standard rate: 15% (filer) / 25% (non-filer) on the gross dividend.
• Reduced rates apply for specified categories (IPPs, mutual funds, REIT distributions, certain industries) per the First Schedule Part III.
• WHT is deducted by the company paying the dividend at the time of payment / credit.
• For recipients who are individuals or AOPs, dividend WHT is final tax — no further income tax is payable and no expenses are deductible.
• For recipients who are companies, dividend WHT is adjustable against CIT, but inter-corporate dividend relief under Section 103 may apply.
• Bonus shares are subject to separate WHT regime where applicable (verify current FA).

3.4 Section 151 — Profit on debt

Trigger. Payment of interest / profit on debt by a Pakistan-resident payer (bank, NBFC, government, company, individual) on bank deposits, savings certificates, government bonds, sukuks, term finance certificates, or general lending.

Mechanics.

• Standard rate: 15% (filer) / 30% (non-filer) on the gross profit on debt.
• For individual recipients where yield exceeds Rs 5m in a tax year, higher rates may apply per First Schedule.
• For most individual / AOP recipients, profit on debt WHT is final tax on amounts up to the threshold; beyond it, treatment shifts to normal regime in some cases — confirm per current FA.
• For company recipients, it is adjustable against CIT.
• Banks withhold automatically at the time of credit to the depositor's account.

3.5 Section 152 — Payments to non-residents

Sub-section	Payment type	Standard rate	ATL impact
152(1)	Royalty	15%	Treaty-capped (typically 10%-15%)
152(1)	Fee for technical services (FTS)	15%	Treaty-capped (typically 10%-15%)
152(1AA)	Insurance / reinsurance premium	5%	2x non-filer
152(1A)	Non-resident contract (construction, assembly, services with site presence)	7%	14% non-filer; election of FTR vs NTR available
152(2)	Other payments to non-residents (general default)	20%	n/a
152(2A)	Payment to non-resident with PE in PK for services	7% – 15% per nature	2x non-filer

Treaty relief. Pakistan has DTAs with 60+ countries. To claim the reduced treaty rate at source, the withholding agent must hold:

• A valid Tax Residence Certificate (TRC) issued by the recipient's home tax authority covering the payment period.
• A declaration from the recipient that they are the beneficial owner and have no PE in Pakistan to which the income is attributable.
• A copy of the contract and invoice.

Without the TRC at the payment date, apply the statutory rate; the recipient may later file a refund claim with FBR.

3.6 Section 153 — Payments for services, goods, and contracts

This is the largest and most-litigated WHT section in Pakistan. Read carefully.

Trigger. A "prescribed person" — defined in Section 153(7) — makes a payment for:

• (a) Sale of goods;
• (b) Rendering of services;
• (c) Execution of a contract (other than sale of goods or services).

Prescribed persons include: federal/provincial governments, local authorities, companies, AOPs with turnover ≥ Rs 50m (verify current threshold), foreign contractors with PE, exporters of goods, and certain individuals with turnover ≥ Rs 50m. Individuals below the threshold and small AOPs are not prescribed persons and have no Section 153 obligation.

Rates (per FA 2025 — verify).

Limb	Recipient type	Filer rate	Non-filer rate	Status
153(1)(a) — goods	Company	4.5%	9%	Adjustable for most; minimum tax for specified goods
153(1)(a) — goods	Individual / AOP	5.5%	11%	Generally minimum tax
153(1)(b) — services — general	Any	11%	22%	Minimum tax
153(1)(b) — services — specified low-margin sectors	Any	4%	8%	Minimum tax
153(1)(c) — contracts	Company	7%	15%	Minimum tax / adjustable
153(1)(c) — contracts	Individual / AOP	7%	15%	Generally minimum tax
153(2) — sportspersons	Individual	10%	20%	Final

Specified low-margin services (4%/8% rate) include transport, freight forwarding, security guarding, advertising commission, software development services (subject to specific notification), and others — verify the current SRO notification listing eligible categories.

Critical distinctions.

• Goods vs services vs contract — the classification drives the rate. A "supply of goods" with installation is typically a contract under 153(1)(c). A pure "service" with no goods component is 153(1)(b). A pure sale of inventory off-the-shelf is 153(1)(a).
• Sales tax exclusion — base is invoice value excluding federal STA 1990 sales tax and any provincial sales tax on services.
• Minimum tax — for most 153 payments to individuals/AOPs, the WHT is minimum tax, meaning the recipient cannot get a refund below the WHT amount even if their normal computation would yield a lower tax.
• Reduced-rate certificate (Section 159) — common in 153(1)(b) services where recipient is a regular filer with documented losses or low-margin business; certificate is application-driven on IRIS.

3.7 Section 155 — Rent of immovable property

Trigger. Payment of rent for use of land, buildings, plant fitted to a building, or furniture by a "prescribed person" (Section 155 has its own definition, broadly mirroring 153).

Mechanics.

• Individuals / AOPs receiving rent: progressive slab
  • Rs 0 – Rs 300,000 / year: 0%
  • Rs 300,001 – Rs 600,000: 5% on excess
  • Rs 600,001 – Rs 2,000,000: Rs 15,000 + 10% on excess
  • Rs 2,000,001 – Rs 4,100,000: Rs 155,000 + 15% on excess
  • Above Rs 4,100,000: Rs 470,000 + 25% on excess
  • (Verify current FA 2025 slabs.)
• Companies receiving rent: 15% (filer) / 30% (non-filer) flat.
• Non-filer recipients: 2x the filer rate.
• WHT under 155 is adjustable against the recipient's annual income tax.

3.8 Section 156 — Prizes and winnings

Trigger. Award of a prize, raffle, lottery, quiz, or winnings from a draw / promotional scheme.

Mechanics.

• Prize bonds (SBP-issued): 15% (filer) / 30% (non-filer).
• Raffle / lottery / quiz prizes / promotional draws: 20% (filer) / 40% (non-filer).
• Tax is deducted before delivery of the prize by the prize-awarding entity.
• WHT under 156 is final tax — the recipient does not include the winnings in normal income.
• Non-cash prizes: tax is computed on the fair market value of the prize and must be collected from the recipient before delivery (or grossed up in the prize design).

3.9 Section 165 — Monthly and annual statements

Every withholding agent must file:

• Monthly Statement (Form prescribed) — through IRIS, by the 15th of the following month, listing every WHT deduction made in the month with: recipient NTN/CNIC, recipient name, section, gross amount, WHT amount, CPR number, and date of deposit.
• Annual Reconciliation Statement — through IRIS, by 31 July following the tax year (i.e. for TY 2024-25 ended 30 June 2025, due 31 July 2025), reconciling all monthly statements.

Consequences of non-filing.

• Penalty under Section 182 — Rs 2,500 per day, minimum Rs 50,000 per default.
• Disallowance of expense under Section 21(c) — any payment from which WHT was not deducted (or not deposited) is disallowed for income tax purposes in the payer's own computation.

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Section 4 — Tier 2: sector specials, treaty rates, tax credits, exemption certificates

4.1 Sector specials

Sector	Special regime
Banking	Seventh Schedule — banks taxed under separate computation; WHT on deposits per Section 151; banks also act as withholding agents on cash withdrawal (231A), banking transactions (236P, where in force), and customer transactions
Insurance	Fourth Schedule — insurance companies taxed under separate computation; premium WHT under Section 152(1AA) for reinsurance to non-residents
Petroleum exploration & production	Fifth Schedule — separate regime; royalty and PSC mechanics outside scope of this skill
Petroleum products distribution	Section 156A — 12% (filer) / 24% (non-filer) on commission to petrol pump operators, final
Independent Power Producers (IPPs)	Section 150 dividend WHT reduced to 7.5% for specified IPP categories; separate corporate tax holiday under Second Schedule
REITs / Mutual Funds	Reduced dividend WHT (typically 7.5% for individuals, 25% for non-filers); pass-through treatment under Second Schedule
Construction & developers	Third Schedule — special tax regime under Section 100D; affects WHT treatment of progress payments
Exporters	Section 154 — export proceeds realized through banks subject to 1% WHT (filer) / 2% (non-filer), generally final; exporter's normal-regime election available subject to conditions
Software & IT services exports	Section 154A — 0.25% on export proceeds realized through banks (concessional); subject to PSEB registration and other conditions
Telecom	Section 236 — subscriber WHT 15% on prepaid / postpaid bills
Electricity	Section 235 — commercial / industrial bills (slab); separate from domestic
Stock market	Section 233A — sale / purchase of shares through stock exchange — broker withholds at 0.02% (verify)

4.2 Treaty rates (illustrative — verify the actual DTA before relying)

Pakistan's standard DTA caps for major partners (top of the headline rate):

Country	Dividend	Interest	Royalty	FTS
United Kingdom	15% / 20%	15%	12.5%	n/a (no FTS Article — falls under Other Income or Business Profits)
United States	15% / 20%	n/a (US-PK DTA limited)	0% (govt) / 15%	n/a
China	10%	10%	12.5%	12.5%
UAE	10% / 15%	10%	12%	12% (in some interpretations)
Saudi Arabia	10%	10%	10%	10%
Germany	10% / 15%	10% / 20%	10%	10%
Switzerland	10% / 20%	10%	10%	10%
Singapore	10% / 12.5%	12.5%	10%	10%

The DTA rate caps the statutory rate only when:

• the recipient is the beneficial owner;
• the recipient is resident in the treaty partner state (TRC required);
• no LOB / PPT / anti-treaty-shopping provision is triggered;
• the income is not effectively connected to a PE in Pakistan (in which case Section 152(1A) PE-attribution rules apply).

4.3 Tax credits and refunds

Adjustable WHT. Tax deducted under sections that are adjustable (e.g. 149 salary, 148 imports for most categories, 153 services to companies, 155 rent, 231A cash withdrawal, 231B vehicles, 236K property purchase) is credited against the recipient's annual income tax liability on the return.

Final tax WHT. Tax deducted under final tax regime sections (150 dividends, 151 profit on debt for individuals, 152(1) royalty/FTS, 153 sportspersons, 154 exports, 156 prizes, 156A petroleum commission, etc.) is not refundable — it is the recipient's final liability on that income. The recipient does not include the gross income in normal taxable income.

Minimum tax. Tax deducted as minimum tax (most 153 services and 153 goods to individuals/AOPs) is credited but only down to the minimum — if normal computation yields less than the WHT, the WHT amount stands as the floor.

Refund procedure. Excess WHT (where annual tax liability is less than total adjustable WHT, including legitimate Section 159 over-deduction) is refunded on application via IRIS using the income tax return as the refund claim. Refund processing is slow in practice — set client expectations accordingly.

4.4 Section 159 — Exemption / reduced-rate certificates

When to apply. A recipient should apply for a 159 certificate when:

• It is a regular filer with documented historical losses or low margins.
• The statutory WHT rate would exceed its expected annual tax liability (creating chronic refund position).
• It enjoys a sector-specific exemption / reduced rate that requires certification.

Process.

• Application on IRIS by the recipient (or its tax representative).
• Commissioner reviews and issues certificate specifying section, recipient, payer (or "all payers"), period, and rate (zero or reduced).
• Certificate is time-bound — typically valid for a tax year or shorter.
• Withholding agent must hold the certificate before the date of payment to apply the reduced rate.

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Section 5 — Worked examples

Example 5.1 — Section 153 services to a company (filer)

Facts. Karachi-based company A pays Karachi-based consulting firm B (private limited company, ATL filer) Rs 1,180,000 inclusive of 18% sales tax for advisory services.

Computation.

• Strip sales tax: gross fee = 1,180,000 / 1.18 = Rs 1,000,000.
• Section 153(1)(b) general services rate (filer): 11%.
• WHT to deduct = 1,000,000 × 11% = Rs 110,000.
• Net paid to B = 1,000,000 (fee) − 110,000 (WHT) + 180,000 (sales tax payable to B who pays output sales tax) = Rs 1,070,000.
• Generate PSID on IRIS, deposit Rs 110,000 by next deposit deadline, obtain CPR, report on monthly 165 statement.

Example 5.2 — Section 153 services (non-filer)

Same facts but B is not on ATL at the date of payment.

• Rate doubles to 22%.
• WHT = 1,000,000 × 22% = Rs 220,000.
• Net paid = 1,000,000 − 220,000 + 180,000 = Rs 960,000.
• (Encourage B to file and appear on ATL to recover refund position via annual return.)

Example 5.3 — Section 152 royalty to UK resident (with TRC)

Facts. Pakistan company pays £100,000 royalty to UK-resident IP owner. TRC and beneficial-ownership declaration on file. UK-PK DTA caps royalty at 12.5%.

Computation.

• Statutory rate (152(1)): 15%.
• Treaty-capped: 12.5%.
• WHT = £100,000 × 12.5% = £12,500, converted to PKR at SBP interbank rate on payment date.
• Deposit via PSID; report on monthly 165 statement.
• Final tax — recipient has no further Pakistan tax obligation on this royalty.

Example 5.4 — Section 148 commercial import

Facts. Importer X (filer) imports finished goods, customs assessed value PKR 10,000,000, customs duty 20% = 2,000,000, no FED.

Computation.

• Import value for income tax = 10,000,000 + 2,000,000 = Rs 12,000,000.
• Section 148 general commercial rate (filer): 5.5%.
• WHT = 12,000,000 × 5.5% = Rs 660,000, collected by Customs at GD assessment.
• Adjustable against X's annual CIT.

Example 5.5 — Section 155 rent to individual landlord (filer)

Facts. Company tenant pays individual landlord (ATL filer) Rs 2,400,000 annual rent.

Computation (slab — verify FA 2025 figures).

• First 300,000 — 0%
• Next 300,000 (to 600,000) — 5% on excess of 300,000 = 15,000
• Next 1,400,000 (to 2,000,000) — 10% on excess of 600,000 = 140,000
• Next 400,000 (to 2,400,000) — 15% on excess of 2,000,000 = 60,000
• Total annual WHT = Rs 215,000, deducted monthly as 17,917 per month from rent payments.

Example 5.6 — Section 153 with Section 159 reduced certificate

Facts. Company X holds a Section 159 certificate from FBR reducing Section 153(1)(b) services WHT to 2% for the period 1 July 2025 – 30 June 2026. Company Y (prescribed person) pays X Rs 500,000 for services.

Computation.

• Apply reduced certificate rate: 2%.
• WHT = 500,000 × 2% = Rs 10,000.
• Y must attach the certificate reference (number + date) to the monthly 165 statement.

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Section 6 — Filing and payment

6.1 Payment workflow — PSID → CPR

1. Log in to IRIS as the withholding agent (NTN-based credentials).
2. Navigate to e-Payments → Create PSID.
3. Select Tax Year, Section (148/149/150/151/152/153/155/156/etc.), Head of Account (income tax — corporate / non-corporate as applicable).
4. Enter recipient details (NTN/CNIC, name, section sub-clause), gross amount, rate applied, WHT amount.
5. Generate PSID — print or save the PDF (contains a unique PSID number and barcode).
6. Take PSID to any authorised branch of a scheduled bank (1Link member) or pay via internet banking linked to the bank's FBR module.
7. Bank issues CPR (Computerized Payment Receipt) with a unique CPR number, deposit date, and amount.
8. CPR is auto-reflected on IRIS within 24-48 hours; reconcile against the PSID before filing the monthly 165 statement.

6.2 Deposit deadlines

Withholding agent type	Deposit deadline
Government departments	Same day / next working day after deduction
Companies	Within 7 days of the end of the week in which deduction was made (per Rule 43 of Income Tax Rules)
Other withholding agents	Within 7 days of the end of the fortnight in which deduction was made
Section 148 imports	Collected by Customs at GD assessment — no separate deposit by importer

In practice, most withholding agents deposit weekly to stay current. The monthly 165 statement is filed by the 15th of the following month listing all deposits made.

6.3 Monthly Section 165 statement (IRIS)

• Due date: 15th of the month following the month of deduction.
• Mode: IRIS — upload of CSV / direct entry / API for ERP integrations.
• Content: every deduction in the month, line by line — recipient NTN/CNIC, name, section, gross amount, WHT amount, CPR number, CPR date.
• Validation: IRIS auto-validates the CPR numbers against the bank deposit data; mismatches must be corrected before submission.
• Penalty for late filing: Section 182 — Rs 2,500 per day, minimum Rs 50,000.

6.4 Annual reconciliation

• Due 31 July of the following tax year (e.g. for TY 2024-25, due 31 July 2025).
• Aggregates all 12 monthly statements and reconciles to the audited financials (where the agent is a company).
• Discrepancies (deducted-not-deposited, deposited-not-statemented, statemented-not-deducted) must be resolved.

6.5 Penalties and consequences

Default	Consequence
Failure to deduct WHT	Disallowance of the expense under Section 21(c) in the payer's own income tax computation; recovery of WHT from payer under Section 161 with default surcharge at KIBOR + 3% (verify current rate)
Failure to deposit deducted WHT	0.1% per day default surcharge on the unpaid amount + penalty under Section 182
Failure to file monthly Section 165 statement	Section 182 — Rs 2,500 per day, minimum Rs 50,000 per default
Late deposit but on time before notice	Default surcharge only; no penalty if voluntary
Use of incorrect (lower) rate without justification	Recovery of shortfall + default surcharge + penalty
Non-application of non-filer rate where recipient was non-ATL	Withholding agent personally liable for the shortfall under Section 161

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Section 7 — Conservative defaults

When inputs are missing or ambiguous, apply these conservative defaults and flag for verification:

Ambiguity	Conservative default
ATL status unverified at payment date	Apply non-filer rate (typically 2x) — flag to confirm
Treaty rate claim without TRC	Apply statutory non-resident rate — flag for refund claim path
Goods vs services vs contract classification unclear	Apply contract rate (7%/15%) as it is generally the highest of the 153 sub-limbs and avoids under-withholding
Sales tax inclusion in invoice ambiguous	Strip sales tax conservatively — base = invoice / (1 + applicable sales tax rate)
Section 159 certificate provided but expired / wrong section / wrong payer	Disregard the certificate and apply full rate — flag for renewal
Prescribed-person status of payer unclear (Section 153)	Assume prescribed and withhold — over-withholding can be recovered by recipient via refund
Sector classification for low-margin 153 services unclear	Apply general rate (11%/22%) rather than reduced (4%/8%)
Date of payment vs date of credit unclear	Use the earlier date as the tax point
Current-year rate ambiguity in user's mind	Quote the FA 2025 rate but ALWAYS flag "verify against current First Schedule on FBR website before depositing"
Multi-section overlap (e.g. payment that could be 153 services or 152 FTS to non-resident)	Apply the more specific section — for non-residents that means 152; for residents, 153
Annual rent split across months for slab computation	Annualise the rent and apply slab to annual figure; deduct pro-rata monthly

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Section 8 — Sources

#	Source	Use
S-1	Income Tax Ordinance 2001 (consolidated up to Finance Act 2025) — published on FBR website (https://www.fbr.gov.pk)	Primary statute for all WHT sections
S-2	Income Tax Rules 2002 (consolidated) — FBR website	Procedural rules — Rule 43 (deposit deadlines), Rule 44 (statement forms), Rule 73-75 (159 certificates)
S-3	First Schedule to ITO 2001 — Part II (rates), Part III (rate categories), Part IV (special rates)	All WHT rate figures
S-4	Tenth Schedule to ITO 2001 — ATL / non-filer rate cascade	Filer vs non-filer 2x mechanics
S-5	Active Taxpayers List (ATL) — FBR weekly publication on https://www.fbr.gov.pk/ATL	Real-time filer status check
S-6	Finance Act 2024 (Pakistan) and Finance Act 2025 (Pakistan) — text published in Gazette of Pakistan	Current-year rate amendments
S-7	FBR Circulars and SROs — current notifications on https://www.fbr.gov.pk	Sector-specific reduced rates, low-margin services classification, exemptions
S-8	IRIS portal — https://iris.fbr.gov.pk	PSID generation, CPR reconciliation, 165 statements, 159 certificate applications
S-9	DTA texts — published on FBR website under "International Taxation → Treaties"	Treaty rate caps for non-resident WHT
S-10	State Bank of Pakistan (SBP) — https://www.sbp.org.pk	Interbank exchange rates for foreign-currency payment conversion
S-11	ICAP Tax Bulletins and ICMAP Tax Reviews	Practitioner commentary on FA amendments
S-12	Pakistan Tax Bar Association and case law — Income Tax Appellate Tribunal (ITAT) and High Courts reported decisions on FTR vs NTR, prescribed-person status, treaty interpretation, and Section 153 classification disputes	Interpretive guidance

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End of skill v1.0 — pk-withholding-tax.

Reviewer note. Pakistan WHT rates change with every Finance Act and frequently within the year via SROs. Every figure in this skill is stated "as per FA 2025 — verify against current First Schedule" and must be confirmed against the live FBR text before any client-facing computation. Sign-off by an ICAP-registered Chartered Accountant or FBR-registered Income Tax Practitioner is required before reliance.

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