How to File Withholding Tax Statements in Pakistan?

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How to File Withholding Tax Statements in Pakistan?

Understanding Withholding Tax Statements

Withholding tax statements are required under Section 165 of the Income Tax Ordinance, 2001. These statements report the taxes withheld from various income sources, such as salaries, business payments, and property rentals.

Steps to File a Withholding Tax Statement

1. Login to the FBR IRIS Portal: Access the IRIS Portal using your FBR credentials.
2. Navigate to Withholding/Advance Tax: Locate the “Withholding/Advance Tax” tab in the main menu.
3. Select Statement Type: Choose the appropriate statement type based on your requirements. Common options include:
   
   • 165(1) (Biannual Withholding – Original)
   • 165(1) (Biannual Withholding – Revised)
   • 149 (Annual Withholding – Original)
   • 165(1) Quarterly Withholding – Original)
   • 165(2a) (Quarterly Withholding – Revised)
   • 165(7) (Annual Statement of Deductions Withholding Taxes)
   • Sales Tax – Withholding Agent
4. Provide Information: Enter the required details, such as the tax period, total tax withheld, and the names of taxpayers.
5. Upload Documents: Attach any supporting documents, if necessary.
6. Submit Statement: Review the information and submit the statement electronically.

Quarterly Filing for Withholding Tax

As per the current Income Tax Rules, withholding tax statements are typically filed on a quarterly basis. Therefore, you will generally need to file the “165(1) Quarterly Withholding – Original)” statement for each quarter.

Withholding tax statements must be filed even if no tax was withheld during the period. This requirement ensures accurate reporting and helps the Federal Board of Revenue (FBR) maintain a comprehensive record of tax transactions.

Revision and Extension

If you need to revise your withholding tax statement, you can do so within 60 days of the original filing. Additionally, you can request an extension for filing the statement if required. Both options are available under the “Applications” menu.

Tax Collection and Payment Procedures

Time of Payment

• Government Collection or Deduction: Taxes collected or deducted by the Federal or Provincial Government must be remitted within the same day.
• Private Entity Collection or Deduction:
  
  • Domestic Remittance: Taxes collected or deducted by private entities must be remitted to the government treasury or deposited in an authorized bank within 15 days.
  • Foreign Remittance: Taxes deducted from payments made to non-residents must be remitted abroad through the State Bank or another banking company prior to sending the payment.

Failure to Pay Tax

• Personal Liability: If a person fails to collect or pay tax as required, they will be personally liable to pay the tax amount.
• Recovery Order: The Commissioner can issue a recovery order to collect the unpaid tax.
• Right to be Heard: The person must be given an opportunity to be heard before a recovery order is issued or amended.

Penalty for Failure to Collect or Deduct Tax

• Default Surcharge: If a person fails to collect or deduct tax and the tax is later paid by the recipient, the person will be liable to pay a default surcharge of 12% per annum from the date of failure to the date of payment.
• Recovery from Recipient: The person who failed to collect or deduct tax can recover the amount from the recipient.

Recovery from Recipient

• Recovery Order: The Commissioner can issue a recovery order to recover the tax from the person who should have paid the tax.
• No Exoneration: Recovering the tax from the recipient does not absolve the person who failed to collect or deduct the tax from other legal actions or penalties.

By following these steps and understanding the specific requirements for your withholding tax obligations, you can ensure timely and accurate filing of your statements.

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