Every rupee you pay or receive is subject to withholding tax. Verified rates from FBR sources — Section 153, 154A, 155, 236C and more.
Withholding Tax is a system where the person making a payment deducts tax at source before paying the recipient. Think of it as "tax collected at the point of transaction."
As an IT company, WHT affects you in two ways:
When you pay for services, rent, or other expenses — you must deduct tax before paying and deposit it to FBR.
When clients pay you, when you receive bank transfers, or when you sell property — someone deducts tax before it reaches you.
VERIFIED — FY 2025-26 (Finance Act 2025)
When you receive foreign remittance for IT/ITeS exports — the most relevant section for IT companies
| Category | Rate | Nature | Who Deducts? |
|---|---|---|---|
| IT/ITeS Exports — PSEB Registered | 0.25% | Final Tax (FTR) | Bank deducts on remittance |
| IT/ITeS Exports — Filer (No PSEB) | 1% | Final Tax (FTR) | Bank deducts on remittance |
| IT/ITeS Exports — Non-Filer | Double Rate | Final Tax (FTR) | Bank deducts on remittance |
| Freelance IT (PSEB Registered) | 0.25% | Final Tax (FTR) | Bank deducts on remittance |
Source: TaxPills | TaxationPk
When you pay someone for services (or when a client pays you for domestic services)
| Service Type | Filer Rate | Non-Filer Rate | Who Withholds? | Min Threshold |
|---|---|---|---|---|
| IT & Software Development Services | 6% | 12% | Payer deducts | Rs. 30,000/year |
| Other Services (by Company) | 15% | 30% | Payer deducts | Rs. 30,000/year |
| Other Services (by Individual/AOP) | 15% | 30% | Payer deducts | Rs. 30,000/year |
| Goods (by Company) | 5% | 10% | Payer deducts | Rs. 75,000/year |
| Goods (by Individual/AOP) | 5.5% | 11% | Payer deducts | Rs. 75,000/year |
| Contracts (by Company) | 7.5% | 15% | Payer deducts | — |
Source: TaxationPk — WHT Rates in Pakistan (Finance Act 2025)
When you pay office rent
| Payment Type | Filer Rate | Non-Filer Rate | Who Withholds? |
|---|---|---|---|
| Corporate rent (office, warehouse) | 15% | 30% | You (the tenant) deduct |
| Individual rent (slab rates) | See slab below | Tenant deducts | |
| Annual Rent Range | Tax |
|---|---|
| Up to Rs. 300,000 | Tax-free |
| 300,001 – 600,000 | 5% of amount exceeding Rs. 300,000 |
| 600,001 – 2,000,000 | Rs. 15,000 + 10% of amount exceeding Rs. 600,000 |
| Above Rs. 2,000,000 | Rs. 155,000 + 25% of amount exceeding Rs. 2,000,000 |
When you deposit or withdraw cash from your bank account
| Transaction | Filer Rate | Non-Filer Rate | Threshold |
|---|---|---|---|
| Cash withdrawal | 0.6% | 1.2% | Per transaction (no minimum) |
| Bank transfer (RTGS/online) | No WHT | N/A | |
| Profit on savings/deposits | 15% | 30% | Bank deducts automatically |
When you buy or sell property
| Property Value | Filer Rate | Late Filer Rate | Non-Filer Rate |
|---|---|---|---|
| Up to Rs. 50M | 4.5% | 7.5% | 11.5% |
| Rs. 50M – 100M | 5% | 8.5% | 11.5% |
| Above Rs. 100M | 5.5% | 9.5% | 11.5% |
Source: TaxationPk
When you pay foreign contractors, platforms, or service providers
| Payment Type | Rate | Notes |
|---|---|---|
| Royalties / technical fees | 15–25% | May qualify for exemption under tax treaties |
| Software licensing | 15% | Check DTAA with recipient's country |
When you pay for foreign services via debit/credit card
| Transaction | Filer Rate | Non-Filer Rate |
|---|---|---|
| Foreign transactions via card | 5% | 10% |
| Section | Description | Filer Rate | Non-Filer Rate |
|---|---|---|---|
| Sec 149 | Dividends | 15% | 30% |
| Sec 151 | Interest on securities | 15% | 30% |
| Sec 152 | Prizes & winnings | 15% | 30% |
| Sec 231A | Advance tax on purchase of goods | 5% | 10% |
| Sec 236K | Advance tax on education fees | 5% | 10% |
When you deduct WHT from payments, you must deposit it to FBR within the prescribed time.
| Section | Description | CPR Code |
|---|---|---|
| 153 | Payment for services | 3805 |
| 154A | Export of services (IT) | Bank deducts |
| 155 | Payment for rent | 3807 |
| 149 | Dividends | 3801 |
| 151 | Interest on securities | 3803 |
| 156 | Payments to non-residents | 3814 |
| 236A | Banking transactions | (Bank deducts) |
As a withholding agent, you must file monthly WHT statements in IRIS:
| Period | Filing Deadline |
|---|---|
| Monthly | 15th of the following month |
This is the part most founders don't know about — and it can be devastating.
Deposit this WHT to FBR by the 7th of the following month.
Thinking "the vendor will handle their own tax" is wrong. If you're the payer, you're the withholding agent. Period.
The money you deducted belongs to FBR, not you. Holding it is worse than not deducting — it's misappropriation.
Monthly WHT deposit by the 7th. Miss it even once and default surcharge starts running immediately.
After deducting WHT, you must issue a WHT certificate (CPR) to the person you deducted from. They need it for their tax return.
If the recipient is a non-filer, you must deduct at the higher (non-filer) rate. Check ATL before every payment.
Depositing tax is not enough — you must also file monthly statements detailing every deduction. Missing this triggers penalties.