what is tax rate for contractors in army units like dhubi and barber contractor?

Question

I am referring to individuals or sole proprietors who are awarded small service contracts inside cantonment or army units for providing laundry or barber services to military personnel. What withholding tax or income tax rate applies to them under the current tax laws?

Answer 1

If you are providing services under a contract (e.g., laundry or barber services) to an army unit or cantonment authority, then payments made to you fall under Section 153 (Contracts) of the Income Tax Ordinance, 2001.

The applicable withholding tax rate in 2025-26 depends on your status as a taxpayer, not the payer (WHT agent):

Your Tax Status	If You Are a Filer	If You Are a Non-Filer
Individual / AOP	8%	16%
Company	7.5%	15%

✔️ Most dhobi/barber contractors are individuals or sole proprietors, so the 8% (filer) or 16% (non-filer) rate usually applies.

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Notes:

• The army unit deducts the tax at the time of payment.

• To be charged at filer rate, your name must appear in the Active Taxpayers List (ATL).

• This tax is adjustable, meaning you can claim it in your annual tax return.

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