Withholding taxes are taxes that are deducted from payments made to individuals or businesses by another party. In Pakistan, there are a number of exemptions from withholding taxes. Company can apply under section 159 for exemption from withholding of tax. This application shall be made to the Commissioner Federal board of Revenue. This application can be applied manually as well as as online through iris portal. Some of the most common exemptions include:
- Salaries of employees below a certain income threshold. The amount of the exemption varies depending on the employee’s marital status and the number of dependents.
- Salaries of employees who are members of the armed forces. There is no withholding tax on the salaries of employees who are members of the armed forces.
- Salaries of employees who are working in certain government departments. There is no withholding tax on the salaries of employees who are working in certain government departments, such as the education and health departments.
- Payments made to non-residents. There is no withholding tax on payments made to non-residents, unless the payments are for services rendered in Pakistan.
- Payments made to charitable organizations. There is no withholding tax on payments made to charitable organizations.
How to Claim an Exemption from Withholding Tax
To claim an exemption from withholding tax, the payer must provide the payee with a certificate of exemption. The certificate of exemption must be issued by the relevant government authority.
This exemption is given on quarterly basis or semi annual basis as well. It can also be revoked by the Commissioner FBR.
Conclusion
There are a number of exemptions from withholding taxes in Pakistan. If you believe that you are entitled to an exemption, you should contact the relevant government authority to obtain a certificate of exemption.
Here are some additional tips for claiming an exemption from withholding tax:
- Make sure that you have all of the necessary documentation. This may include your tax identification number, your certificate of exemption, and any other documentation that is required by the relevant government authority.
- File your tax return on time. If you file your tax return late, you may not be able to claim an exemption for the previous year.
- Keep good records. This will help you to track your income and expenses and to support your claim for an exemption.
By following these tips, you can increase your chances of successfully claiming an exemption from withholding tax.
