Withholding Tax Rate in Pakistan

Withholding Tax Rates in Pakistan | Latest Updates

Here are the latest  withholding tax rates in Pakistan proposed in the (budget 2025-2026):

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Key Changes in Withholding Tax for Budget 2025-2026

Tax on Services Increased

The tax that businesses must deduct when paying for services, called withholding tax, has been increased from 11 percent to 15 percent in general.

For some specific services like transport, advertising, software, and others, the rate has been increased from 4 percent to 6 or 8 percent depending on the type of service.
However, IT and IT-related services will still be taxed at the lower rate of 4 percent.

Tax on Profit from Debt Increased

If you earn money from profit on debt, such as fixed deposits or savings certificates, the tax has increased from 15 percent to 20 percent.

Higher Tax on Dividends

If you receive dividends, which is a share of company profits, you will now pay 25 percent tax.
If the dividend is from a mutual fund, the tax will be 15 percent.

Cash Withdrawal by Non-Filers

People who do not file tax returns, called non-filers, will now pay 1 percent tax when they withdraw cash from banks. Previously, this tax was 0.6 percent.

Tax on Sportspersons Increased

Professional sportspersons will now pay 15 percent tax on their income, instead of the earlier 10 percent.

Tax on Digital E-Commerce Transactions

A final withholding tax is now applied on digital payments made through online shopping platforms in Pakistan.
Banks and courier services will collect this tax and deposit it with the government.

Higher Tax on Many Service Payments

When paying for services such as freight, courier, manpower supply, hotels, security, software, car rental, advertising other than print or TV, building maintenance, inspection, testing, training, and oilfield services, the tax will now be:

  • 6 percent for local companies
  • 8 percent for foreign companies with offices in Pakistan

Tax on Purchases from Non-Registered Sellers

If you buy goods or services from someone who does not have an NTN, or National Tax Number, you will be charged 10 percent tax on that purchase.

General Withholding Tax Rates in Pakistan (FBR) 2024-2025

Withholding Tax Rates in Pakistan On Goods (Imports and Local) (Section 153)

Goods covered under various parts of the First Schedule have withholding tax rates of 1% to 6% for filers and 2% to 12% for non-filers, varying according to the type of goods and whether the importer is a commercial importer.

Withholding Tax Rate in Pakistan on Salaries  (Section 149)

Tax rates are progressive according to taxable income slabs starting from 2.5% for income over Rs. 600,000 up to 35% for income over Rs. 6,000,000 per year.

Withholding Tax On Services in Pakistan (Section 153)

For services other than the ones mentioned specifically, withholding tax rates are:

  • Companies: 9% for filers and 18% for non-filers
  • Others: 11% for filers and 22% for non-filers

For electronic and print media advertisement services, rates are 1.5% for filers and 3% for non-filers. Sindh Revenue Board (SRB) charges a normal withholding sales tax rate of 13% on services.

Withholding Tax Rates in Pakistan On Prize Bonds and Winnings (Section 156)

Withholding Tax On Prize Bonds

Prize bond winnings are taxed at 15% for filers and 30% for non-filers at the point of payment. This tax is considered a final tax on the prize money.

Withholding Tax Rates in Pakistan On Cash Withdrawals

Cash withdrawals of more than Rs. 50,000 in a day by non-filers are charged a withholding tax of 0.6%, to be raised to 0.9% in 2024-25.

No withholding tax is charged for government organizations, diplomats, or exemption certificate holders.

On Bank Profits (Profit on Debt)(Section 151)

Withholding tax on profit on debt (i.e., interest on bank deposits) is 15% for filers and 35% for non-filers.

On Dividends

Dividend withholding tax rates usually vary from 15% to 30% based on filer status and company type.

On Export Proceeds

Withholding tax at the rate of 1% is applied on export proceeds with partial relief for subsequent years.

Withholding Tax Rate in Pakistan on Contracts (Section 153)

Applicable to payments on contracts or sub-contracts for construction, assembly, installation, or services.

Tax rates differ based on whether the payer and payee are companies or others, and whether the payee is a filer or non-filer.

Standard rates for the execution of contracts:

  • Companies (filer): 7%
  • Companies (non-filer): 14%
  • Others (filer): 7.5%
  • Others (non-filer): 15%

Tax is withheld at the time of payment and deposited within the given timelines.

Non-resident individuals entering into contracts in Pakistan are liable for withholding tax at 7% of the gross amount.

Withholding Tax on Commission & Brokerage (Section 233)

Withheld by federal/provincial/local governments, companies, or associations while paying brokerage or commission.

Rates vary based on agent type and filer status:

  • Advertising agents: 10% (filer), 20% (non-filer)
  • Life insurance agents (commission < PKR 500,000): 8% (filer), 16% (non-filer)
  • Others: 12% (filer), 24% (non-filer)

Tax is deducted at the time of payment of brokerage or commission.

Advance Tax on Sale by Auction (Section 236A)

Tax is collected as advance tax on the gross sale price of goods or property sold by auction. In the case of immovable property sold by auction, the rate is 5% of the gross sale price.

It is collected at the time of sale and can be set off against final tax liability.

Advance Tax on Debit & Credit Cards (Section 236Y)

All banking companies making remittances outside the country through credit, debit, or prepaid cards have to collect tax at:

  • 1% for individuals on the Active Taxpayers List (ATL)
  • 2% for those not on the ATL

The tax is collected while making remittances outside the country.

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Withholding tax on Cash Withdrawal from Bank (Section 231A and 231AB)

Section 231A was omitted by the Finance Act 2021 but tax collection on cash withdrawals from non-ATL persons was reintroduced under Section 231AB by Finance Act 2023.

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.

Exemptions apply to federal/provincial governments, foreign diplomats, and persons with exemption certificates from the Commissioner.

The earlier exemptions under Section 231A no longer hold.

Withholding Tax on Purchasing Property (Section 236K)

Advance tax on the transfer or purchase of immovable property.

Rates have been increased from July 1, 2023.

For filers, the rate went up from 2% to 3% of the value of the property.

The tax is withheld at the time of purchase and remitted to the government.

Withholding Tax on Selling Property (Section 236C)

  • Advance tax on sale or transfer of immovable property.
  • The rates have also been raised from earlier levels.
  • The tax is deducted at the time of sale and deposited accordingly.

Advance Tax on Vehicle Token – 2025 (Based on Engine Capacity)

Whether you’re a filer or non-filer, the advance tax you pay for your vehicle’s token in Pakistan depends on the engine size (measured in cubic centimeters or cc). The larger the engine, and if you’re not on the Active Taxpayers List (ATL), the more you pay.

Below is the latest breakdown for 2025:

Engine Size (cc)Filer (PKR)Non-Filer (PKR)
Up to 1000cc8001,600
1001cc – 1199cc1,5003,000
1200cc – 1299cc1,7503,500
1300cc – 1499cc2,5005,000
1500cc – 1599cc3,7507,500
1600cc – 1999cc4,5009,000
2000cc & above10,00020,000

If you’re not listed as a filer, you could end up paying double the tax! So, if you’re driving a car with a larger engine or plan to upgrade, it’s smart to stay ATL compliant to save money.

Withholding Tax Rates for Filers vs. Non-Filers

DescriptionFiler RateNon-Filer Rate
Services (general)3% or 7%6% or 14%
Prize Bonds15%30%
Savings Account Profits15%30%
Cash Withdrawals (> Rs. 50,000)0%0.6% (proposed 0.9%)
Bank Profit on Debt15%35%
Goods Imports (varies by type)1%-6%2%-12%

Note: Specific rates for services vary depending on the nature of the service and whether it is a specific or general service.

Other Specific Withholding Tax Rates in Pakistan

  • Loading Transporters: Specific rates are not detailed in the summary, but generally fall under service withholding tax rates.
  • Buying Motor Car Tyres: Treated under goods import or local supply withholding tax rates based on the transaction.
  • Hotel Stay: Withholding tax under the services category, normally 9% in the case of companies and 11% in the case of others (filers).
  • Electronic Goods: Withholding tax rates on the import of electronics are delineated with special provisos, normally lower rates for filers.

Comprehending Withholding Requirements in Pakistan

In general, when a person earns a salary, the complete amount of tax is deducted by the employer at the time of salary payment, according to the prevailing salary tax slabs. 

Apart from salaries, different withholding tax (WHT) rates are used on other goods, services, and contractual payments.

These rates do not apply to all people, it depends on whether the service provider or supplier is an active filer or non-filer. 

For individuals and Associations of Persons (AOPs), this difference in filer status can have a major effect on the amount of tax withheld at the source.

How do you calculate tax withholding?

Identify the payment type (e.g., salary, rent, bank profit), check the latest FBR rate, and apply it to the amount. Rates differ for filers and non-filers. Then use the withholding tax calculator pakistan for calculation

Summary of Withholding Tax Proposed in Budget 2025-2026

  • Withholding tax on services increased from 11% to 15%.
  • Specific services tax raised from 4% to 6% or 8%; IT services remain at 4%.
  • Tax on profit from debt increased from 15% to 20%.
  • Dividend tax raised to 25%, and 15% for mutual funds.
  • Non-filers pay 1% tax on cash withdrawals (up from 0.6%).
  • Tax on sportspersons increased from 10% to 15%.
  • Final withholding tax introduced on digital e-commerce payments.
  • Tax on many service payments raised to 6% for local and 8% for foreign companies.
  • Purchases from non-registered sellers face 10% withholding tax.
  • Withholding tax rates in Pakistan range widely based on the nature of the transaction, filer status, and whether the payer is a company or individual.
  • Filers are granted lower rates than non-filers, who have higher withholding taxes as an incentive to comply.

  • For the latest and most accurate information, taxpayers need to check the official FBR withholding tax rate card and take advice from tax professionals.

Get the Latest Insights on Key Tax Rates in Pakistan:

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