.
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Amendments in Income Tax
ordinance, 2001 vide Finance
Act, 2008 (Insurance Sector)
Payment to non-resident
152 (1AA)
Every person making a payment of
insurance premium or re-insurance
premium to a non-resident person
shall deduct tax from the gross amount
paid.
Payment to Non-Resident
The rate of tax to be deducted from
payments referred to in sub-section (1AA)
of section 152 shall be 5% of the gross
amount paid.
Payment to Non-Resident
152(1BB)
Tax deducted under sub-section (1AA)
shall be a final tax on the income of the
non-resident person arising out of such
payment.
Certificate of collection or
deduction of tax
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Every person collecting tax shall, at the
time of collection or deduction of the tax,
furnish to the person from whom the tax
has been collected or to whom the
payment from which tax has been
deducted has been made, a certificate
setting out the amount of tax collected or
deducted
Section 107 of Income Tax
Ordinance, 2001
•
The Provisions of Double Taxation
treaties override the provisions of
Income Tax Ordinance 2001.
Section 152 (IAA) of Income tax
Ordinance, 2001
•
Not applicable to the non-resident
companies having residence in the
countries with which Pakistan has
entered into Double Taxation Treaties.
Agreements on Avoidance of
Double Taxation between
Pakistan and following countries
1)
4)
7)
10)
13)
16)
19)
22)
25)
28)
31)
34)
37)
40)
43)
46)
49)
52)
Austria
Belgium
Denmark
France
Holland
Indonesia
Italy
Kazakhstan
Kuwait
Malaysia
Netherland
Oman
Qatar
Singapore
Sweden
Thailand
Turkmenistan
USA
2) Azerbaijan
5) Canada
8) Egypt
11) Germany
14) Hungary
17) Iran
20) Japan
23) Kenya
26) Lebanon
29) Malta
32) Nigeria
35) Philippines
38) Romania
41) South Africa
44) Switzerland
47) Tunisia
50) UAE
53) Uzbekistan
3) Bangladesh
6) China
9) Finland
12) Greece
15) India
18) Ireland
21) Jordan
24) Korea
27) Libya
30) Mauritius
33) Norway
36) Poland
39) Saudi Arabia
42) Srilanka
45) Syrian
48) Turkey
51) United Kingdom
Exemption Certificates
Exemption Certificate for non deduction
of Income Tax Under Section 152(1AA)
not required.
WITHOLDING PROVISONS
APPLICABLE TO INSURANCE
BUSINESS
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APPLICABLE WITHOLDING SECTIONS AT A
GLANCE

Salaries
u/s 149

Dividends
u/s 150

Non Residents (General)
u/s 152

Non Residents (Premiums)
u/s 152

Non Residents (Advertisements)
u/s153A

Local Contracts & Services
u/s 153

Rent of properties
u/s 155

Prizes & Winnings
u/s 156

Commission
u/s 233
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OBLIGATIONS

Deduct Tax at prescribed rates.

Deposit Tax within 7 days of the end of fortnight

Issue Prescribed Deduction Certificate to payee



Salary
within 45 days of the end of F.Y.
Others
within 15 days of the end of F.Y.
On request of Payee
within 7 days of request.

Submit Monthly Statement by 20th of following
month

Submit Annual Statement by 31st August

Furnish Reconciliation of Statements,if required
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SALARIES

Payment through cross cheque or transfer
except upto Rs. 15,000 p.m. which may be
paid in cash.

Deductions to be made on average basis

Rates of Deductions as per First Schedule

Adjustments may be made for credits and
other deductions as per section 149 (1)

Deductions also to be made from payment
out of Pension Fund.(Sec 156B)
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SALARIES

No deductions upto Rs. 180,000

In case of woman, no deductions upto Rs.
240,000

Minimum rate of deduction 0.5 %

Maximum rate of deduction 20 %
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DIVIDENDS
Deduction of Tax at the time of Payment
Tax to be deducted at 10 % by Resident
companies ( Division III Part I 1st Schedule )
Dividend to include after tax profit of a branch
of a foreign company ( Section 2 (19) (f) )
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INSURANCE OR RE-INSURANCE PREMIUM
PAYMENT TO NON RESIDENT PERSON
(SECTION 152(1AA)

Inserted through Finance Act 2008.

Rate of Tax Deduction
5%
( Div II Part III 1st
Schedule)

Full & Final Tax as Pakistan source
income (Section 152(1BB))
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PAYMENT OF LOCAL COMMISSION
Tax to be deducted / collected at 10 %
( Part IV of First Schedule )
Rate in case of Advertising Agents at 5 %
(Clause 26 Part II 2nd Schedule )
Tax is full & Final in case of Recipients
( Section 233 (2) )
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PAYMENT TO NON RESIDENT MEDIA
PERSONS

Payment for advertisement services
attract this deduction ( Section 153A)

Rate of Tax Deduction 10 %
(Division IIIA,
Part III ,First Schedule )

Full & Final tax as Pakistan source
income (Section 169 (1)(b))
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RENT OF IMMOVEABLE PROPERTY

Rent to include advance rent , rent of
furniture / fixtures and amount for
services relating to such property.
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RATES OF TAX DEDUCTION ON RENT
( Div V Part III 1st Schedule / Clause 28 Part II 2nd Schedule
)

PAYMENT TO INDIVIDUAL

From 150,000 to 400,000
5 % of amount exceeding 150,000

From 400,000 to 1000,000
12500 + 7.5 of amount exceeding 400,000

Exceeding 1,000,000
57,500 +10 of amount exceeding 1,000,000

PAYMENT TO COMPANY

Upto 400,000
5%

From 400,000 to 1,000,000
20,000 + 7.5 % of amount exceeding 400,000

Exceeding 1,000,000
65,000 + 10 % of amount exceeding 1,000,000
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EXPOSURES ON DEFAULT
1.
In case of non deduction of tax at source,
following expenditures are inadmissible ;
. Salary
. Services and Fee
. Rent
. Commission
. Contractual Payment
. Payment to Non
Residents
2.
Defaulted amount will be recoverable with
additional tax @ 12 %.
3.
Prosecution proceedings may be initiated.
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FORMAT OF STATEMENTS

Monthly Statement ( Consolidated for salary
& other payments )

Annual Statement for Salary

Annual Statement for Other payment .
Formats may be downloaded from
http://
fbr.gov.pk /
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EFILING ON FBR PORTAL

Get enrolled at https://e.fbr.gov.pk

Obtain Digital certificate from NIFT
(www.nift.com.pk)

Submit Returns, Statements , application on
line

Make the payments on line
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BENEFITS OF EFILING

Filing of Income Tax Returns and Statements
electronically

Tax Payment by Taxpayers and Withholding Agents

Payment Collection by Banks

Online Payments from bank accounts electronically
(ePayments)

In order to facilitate the taxpayers and users of these
services; FAQs and help is available online, however
in case of any further assistance , please contact at
following:

Helpline : (051) 111-772-772 ... 24 hrs
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FEDERAL EXCISE DUTY (F.E.D)
Services provided or rendered in respect of
insurance to a policy holder by an insurer,
including a re-insurer “[in case where direct
insurance service has been provided]
i) Goods insurance
RATE OF DUTY
“[Ten] per cent of the
gross premium paid.
ii)
Fire insurance
do
iii)
Theft insurance
do
iv)
Marine insurance
do
v)
Other insurance
do
FEDERAL EXCISE DUTY (F.E.D)
-
Exclusion: Life Insurance
Rule 40 : Special procedure for insurance companies
Monthly return in the form STR-7 (Sales Tax Rules 2006)
Return to be filed by 15th day of the following month.
-
In case of default
Default surcharge @ 1.5% per month
-
Penalty provision
- Non-filing of return: Rs.5000/-.
- Non or short payment of duty ; Rs.10,000/- or
5% of the duty involved whichever is greater
- If return filed within 15 days of due date; Penalty of
Rs.100/- for each day of default.
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