(As per the Income Tax Ordinance, 2001)
In Pakistan, the Income Tax Ordinance, 2001, governs the deduction and adjustment of advance and withholding taxes throughout the year. Many individuals and businesses are subject to various advance and withholding taxes on everyday transactions such as salaries, banking, electricity bills, property dealings, and more. These taxes are deducted at source and can be adjusted against your final annual tax liability when filing your income tax return.
Below is a detailed list of sections under which adjustable taxes are deducted. Familiarizing yourself with these sections can help you ensure that your withheld taxes are appropriately claimed and adjusted during tax filing.
1. Section 149 – Tax on Salary 💼
Employers are required to deduct tax from employees’ monthly salaries. This withholding is based on estimated annual income and tax slab rates and is adjustable against the final tax liability.
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2. Section 153 – Tax on Payments for Goods, Services, and Contracts 🛒
This section applies to businesses making payments to vendors or contractors for the provision of goods, rendering of services, or execution of contracts. The tax withheld is adjustable for the recipient.
3. Section 155 – Tax on Income from Property 🏠
Tax is deducted at source from rent payments made by tenants to landlords. This withheld amount is adjustable against the landlord’s final tax liability.
4. Section 231A – Tax on Cash Withdrawal 🏧
Banks deduct tax on cash withdrawals exceeding a prescribed threshold by non-filers. This tax is adjustable for filers who later file their returns.
5. Section 231B – Tax on Banking Transactions 💳
Applies to the issuance of demand drafts, pay orders, or any instrument of transfer of funds. This deduction is adjustable against final tax for filers.
6. Section 233 – Tax on Brokerage and Commission 🤝
Individuals or firms receiving commission or brokerage are subject to tax deduction, which is later adjusted in their return.
7. Section 234A – Tax on Motor Vehicle Leasing 🚗
When leasing a motor vehicle, a tax is deducted on each lease payment. This tax is also considered adjustable.
8. Section 235 – Tax on Electricity Bills 💡
Commercial and industrial electricity consumers are subject to withholding tax if the bill exceeds a certain threshold. It is adjustable for active taxpayers.
9. Section 235A – Tax on Domestic Electricity Consumers 🏡
For domestic users with high consumption, tax is deducted on electricity bills and is adjustable if the consumer is a filer.
10. Section 236 – Tax on Telephone and Internet Bills 📱
A fixed percentage is deducted from telecom and internet bills. Filers can adjust this tax while filing their return.
11. Section 236A – Tax on Sale by Auction 📢
If you purchase goods or property through an auction, tax is deducted at the source and can be adjusted against your final tax liability.
12. Section 236B – Tax on Purchase of Air Tickets ✈
Tax is collected at the time of purchasing domestic or international air tickets. This tax is also adjustable.
13. Section 236C – Tax on Sale of Immovable Property
When you sell property, tax is deducted at the time of transaction. This can later be adjusted while filing the annual return.
14. Section 236D – Tax on Functions and Gatherings 🎉
Event venues are required to deduct tax from the bill for holding functions, weddings, and gatherings. This is adjustable for the person making the payment.
15. Section 236G – Tax on Sales to Distributors, Dealers, and Wholesalers 📦
Manufacturers or importers deduct tax on supplies to dealers and wholesalers. The tax withheld is adjustable.
16. Section 236H – Tax on Sales to Retailers by Manufacturers 🏪
This section applies to tax deductions on supplies made to retailers, which are also adjustable for the taxpayer.
17. Section 236K – Tax on Purchase of Immovable Property 🔑
Buyers of property are required to pay withholding tax at the time of registration. This is adjustable against their tax payable at year-end.