Withholding Tax Rates in Pakistan | Latest Updates
Withholding tax in Pakistan affects every taxpayer, whether you receive a salary, earn bank profits, sell property, or run a business. Yet most people have no idea how much is being deducted, why, or whether they are paying the right rate.
This guide by Waystax covers everything: what withholding tax is, how it works, the latest FBR rates for 2025-26, key budget changes, and how filer status affects every rate you pay.
What Is Withholding Tax in Pakistan?
Withholding tax (WHT) in Pakistan is a form of income tax collected at the source of a payment, before it reaches the recipient. The payer deducts a specified percentage and deposits it directly with FBR on the payee’s behalf.
It applies to a wide range of transactions, including salaries, bank profits, dividends, services, property purchases and sales, imports, and foreign card payments.
How Does Withholding Tax Work?
When a payment is made, the payer deducts a percentage as tax and sends it to FBR. You receive the net amount after deduction.
When you file your annual income tax return, all withholding tax deducted throughout the year is credited against your final tax liability. If more was deducted than you owe, FBR refunds the difference.
Example: Your bank deducts 15% withholding tax on your savings account profit. When you file your return, this 15% is credited against your total tax due. If your total tax liability is lower than what was deducted, FBR owes you a refund.
This is why filing an annual return, even for salaried individuals with tax already deducted at source, is always in your financial interest.
| Payment Type | Who Deducts WHT |
| Salary | Employer |
| Bank profit / interest | Bank or financial institution |
| Dividends | Company paying the dividend |
| Services / contracts | Company making the payment |
| Property purchase | Registrar at time of transfer |
Why Withholding Tax Matters
- For the government: Withholding tax is one of Pakistan’s largest and most consistent sources of federal revenue. It generates cash throughout the year rather than in a single annual payment. It gives the government a steady, predictable income stream.
- For taxpayers: It spreads your tax burden across the year rather than creating a large year-end liability. It also means non-filers automatically pay a higher effective tax rate on every transaction.
- For businesses: Companies acting as withholding agents must deduct, deposit, and report WHT on qualifying payments. Failure to do so makes the payer liable for the full tax amount plus a 25% penalty.
Key Changes in Withholding Tax — Budget 2025-26
| Change | Previous Rate | New Rate |
| Tax on services (general) | 11% | 15% |
| Specific services (transport, advertising, software, etc.) | 4% | 6% or 8% |
| IT and IT-enabled services | 4% | 4% (unchanged) |
| Profit on debt (fixed deposits, savings) | 15% | 20% |
| Dividends (general) | 15–20% | 25% |
| Dividends from mutual funds | 15% | 15% (unchanged) |
| Cash withdrawal by non-filers | 0.6% | 1% |
| Tax on sportspersons | 10% | 15% |
| Purchases from non-NTN sellers | — | 10% (new) |
| Digital e-commerce payments | — | Final WHT introduced (new) |
| Higher service payments (freight, hotels, security, manpower, etc.) | — | 6% local / 8% foreign companies |
Withholding Tax Rates — Complete FBR Rate Card (2024-25)
1. On Salaries (Section 149)
Progressive tax slabs based on annual taxable income:
| Annual Income | Tax Rate |
| Up to Rs. 600,000 | 0% |
| Rs. 600,001 – Rs. 1,200,000 | 2.5% |
| Rs. 1,200,001 – Rs. 2,400,000 | 12.5% |
| Rs. 2,400,001 – Rs. 3,600,000 | 20% |
| Rs. 3,600,001 – Rs. 6,000,000 | 25% |
| Above Rs. 6,000,000 | 35% |
2. On Services (Section 153)
| Service Type | Filer | Non-Filer |
| General services (companies) | 9% | 18% |
| General services (others) | 11% | 22% |
| Electronic and print media advertising | 1.5% | 3% |
| IT and IT-enabled services | 4% | 8% |
| Freight, courier, manpower, hotels, security, software, car rental, advertising (non-print/TV), building maintenance, inspection, testing, training, oilfield services — local companies | 6% | 12% |
| Same services — foreign companies with Pakistan offices | 8% | 16% |
3. On Goods — Imports and Local Supply (Section 153)
| Transaction Type | Filer | Non-Filer |
| Goods (general) | 1%–6% | 2%–12% |
| Commercial importer | Higher rate applies | Double rate applies |
| Purchases from non-NTN sellers | 10% | 10% |
4. On Profit on Debt — Bank Profits (Section 151)
| Taxpayer Status | Rate |
| Filer (ATL) | 15% (proposed 20% for 2025-26) |
| Non-filer | 35% |
5. On Dividends
| Dividend Type | Filer | Non-Filer |
| General dividends | 15%–25% | 30% |
| Mutual fund dividends | 15% | 15% |
6. On Prize Bonds and Winnings (Section 156)
| Taxpayer Status | Rate |
| Filer | 15% |
| Non-filer | 30% |
This is a final tax — no further tax is payable on prize bond winnings.
7. On Cash Withdrawals (Section 231AB)
| Taxpayer Status | Rate |
| ATL filer | 0% |
| Non-filer (daily withdrawals above Rs. 50,000) | 0.6% (proposed 1% for 2025-26) |
Exemptions apply to federal/provincial governments, foreign diplomats, and persons with exemption certificates from the Commissioner.
Note: Section 231A was omitted by the Finance Act 2021. Cash withdrawal tax was reintroduced under Section 231AB by the Finance Act 2023.
8. On Property Purchase (Section 236K)
| Taxpayer Status | Rate |
| Filer | 3% of property value |
| Non-filer | Higher rate applies |
Rates were increased from 2% to 3% for filers effective July 1, 2023.
9. On Property Sale (Section 236C)
Advance tax applies on the sale or transfer of immovable property. Rates differ for filers and non-filers and have been increased from previous levels. Tax is deducted at the time of sale and deposited accordingly.
10. On Contracts (Section 153)
| Taxpayer Type | Filer | Non-Filer |
| Companies | 7% | 14% |
| Others | 7.5% | 15% |
| Non-resident individuals | 7% of gross amount | — |
Applies to construction, assembly, installation, and service contracts.
11. On Commission and Brokerage (Section 233)
| Agent Type | Filer | Non-Filer |
| Advertising agents | 10% | 20% |
| Life insurance agents (commission < Rs. 500,000) | 8% | 16% |
| Others | 12% | 24 |
12. On Foreign Card Payments / Outward Remittance (Section 236Y)
| Taxpayer Status | Rate |
| ATL filer | 1% |
| Non-filer | 2% |
Under Section 231AB, banks must deduct tax at 0.6% on aggregate daily cash withdrawals exceeding Rs. 50,000 from persons not on the ATL.
Applies to payments via debit, credit, or prepaid cards for foreign services, including Netflix, Google, Amazon, education fees, and international purchases.
13. Advance Tax on Vehicle Token (2025)
| Engine Size (cc) | Filer (PKR) | Non-Filer (PKR) |
| Up to 1000cc | 800 | 1,600 |
| 1001cc – 1199cc | 1,500 | 3,000 |
| 1200cc – 1299cc | 1,750 | 3,500 |
| 1300cc – 1499cc | 2,500 | 5,000 |
| 1500cc – 1599cc | 3,750 | 7,500 |
| 1600cc – 1999cc | 4,500 | 9,000 |
| 2000cc and above | 10,000 | 20,000 |
Non-filers pay double tax across every vehicle engine category.
14. On Auction Sales (Section 236A)
Advance tax at 5% of gross sale price on goods or immovable property sold by auction. Collected at time of sale and adjustable against final tax liability.
Filer vs Non-Filer Summary Rate Comparison
Being on the Active Taxpayer List (ATL) cuts your effective withholding tax rate in half across almost every category.
Filing your return with Waystax is the single most impactful step you can take to reduce your tax burden immediately.
| Transaction | Filer Rate | Non-Filer Rate |
| Bank profit on debt | 15% | 35% |
| Cash withdrawal (above Rs. 50,000) | 0% | 0.6%–1% |
| Prize bonds | 15% | 30% |
| Dividends | 15%–25% | 30% |
| Goods imports | 1%–6% | 2%–12% |
| Foreign card payments | 1% | 2% |
| Contracts (companies) | 7% | 14% |
| Services (general) | 9%–11% | 18%–22% |
Withholding Tax on Non-Residents
For non-residents earning income in Pakistan, withholding tax is deducted at source on:
- Fees for technical services
- Royalties
- Dividends
- Interest
- Insurance premiums
- Fees for digital services, money transfers, card networks, and payment gateways
General WHT rate for non-residents: 5% to 20% depending on payment type.
Tax treaty relief: If Pakistan has a tax treaty with the non-resident’s country of residence, the applicable rate may be reduced or eliminated. Pakistan has tax treaties with over 60 countries, including the UK, UAE, China, USA, and Germany. The treaty rate overrides the domestic rate where it is more favorable.
How to Calculate Withholding Tax
- Identify the payment type — salary, service, bank profit, property, etc.
- Check your ATL status — filer or non-filer determines your rate
- Find the applicable FBR section — use the rate card above
- Apply the rate to the gross payment amount
- Deduct and deposit within the prescribed timeline
Waystax provides withholding tax calculation support and compliance management for businesses as part of our Income Tax Return Filing and advisory services.
How Waystax Helps With Withholding Tax
Whether you are an individual trying to understand your deductions or a business managing withholding agent obligations, Waystax makes compliance simple.
For individuals:
- We file your annual return and credit all withholding tax deducted during the year
- We identify refunds where excess WHT was deducted
- We keep you on the ATL so you always pay the lower filer rate
For businesses:
- We advise on the correct WHT rates for every payment type
- We prepare and file withholding tax statements with FBR
- We ensure you never miss a deposit deadline — avoiding payer liability for unpaid WHT
Our services:
- NTN Registration
- Income Tax Return Filing
- Sales Tax Registration
- IP Whitelisting on IRIS FBR
- SECP Company Registration
- 7E Property Verification
FAQs — Withholding Tax in Pakistan
Book a Free Consultation with Waystax
Withholding tax touches every financial transaction you make in Pakistan. The difference between filer and non-filer rates adds up to hundreds of thousands of rupees every year on banking, property, dividends, and more.
Waystax keeps you compliant, on the ATL, and always paying the right rate.
Stop Overpaying Withholding Tax.
Waystax gets you on the Active Taxpayer List, files your annual return, and makes sure every rupee deducted as withholding tax is correctly credited back to you.
