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28-Model Extension
Where;
151(1)(a): a person pays yield on an account, deposit or a certificate under the National Savings Scheme or Post Office Savings Account;
151(1)(b): a banking company or financial institution pays any profit on a debt, being an account or deposit maintained with the company or institution;
151(1)(c): the Federal Government, a Provincial Government or a Local Government pays to any person profit on any security other than that referred to in clause (a) issued by such Government or authority;
151(1)(d): a banking company, a financial institution, a company or a finance society pays any profit on any bond, certificate, debenture, security or instrument of any kind (other than a loan agreement between a borrower and a banking company or a development finance institution) to any person other than financial institution.
the payer of the profit shall deduct tax at the rate specified in DIVISION IA OF PART III OF THE FIRST SCHEDULE from the gross amount of the yield or profit paid as reduced by the amount of Zakat, if any, paid by the recipient under the Zakat and Ushr Ordinance, 1980 (XVII of 1980), at the time the profit is paid to the recipient.
WITHHOLDING TAX DEDUCTION / RATES | ||||||
|---|---|---|---|---|---|---|
|
|
| APPLICABLE TO CO / AOP / IND | TAX | ||
SR | UNDER | PARTICULARS / DESCRIPTION | FILER | NON | IND / AOP | CO |
1 | 151(1)(a) | Yield on an account, deposit or a certificate under the National Savings Scheme or Post office saving account | 15% | 30% | MTR* | NTR |
2 | 151(1)(b) | Yield or profit on a debt, being on an account or deposit maintained with a banking company or a financial institution | 20% | 40% | ||
3 | 151(1)(c) | In case of Individual; Yield or profit on any security issued by Federal Government, a Provincial Government or a local Government other than profit on National Saving Scheme or Post Office Saving account to any person | 15% | 30% | ||
In case of Company / AOP; Yield or profit on any security issued by Federal Government, a Provincial Government or a local Government other than profit on National Saving Scheme or Post Office Saving account to any person | 20% | 40% | ||||
4 | 151(1)(d) | Profit on any bond, certificate, debenture, security or instrument of any kind (excluding loan agreement between a borrower and a banking company or a development finance institution) issued by a banking company, a financial institution, company or a finance society, to any person other than a financial institution | 15% | 30% | ||
5 | - | In all cases, other than mentioned above clauses | 15% | 30% | ||
Where the profit derived by an individual exceeds five million rupees, the income shall be taxed under the normal tax regime, and any tax deducted at source shall be treated as adjustable. | ||||||
Any person responsible for paying pension to a former employee who is below the age of seventy years and deriving pension income during a tax year in which the payment exceeds rupees ten million, shall at the time of payment, deduct tax from the amount which is over and above rupees ten million at the rate provided in DIVISION I OF PART I OF THE FIRST SCHEDULE of the Ordinance, along with tax deducted under section 4AB after making adjustment of tax withheld from former employee under other heads and tax credit admissible under sections 61 and 63 of the Ordinance during the tax year after obtaining documentary evidence, as may be necessary.
WITHHOLDING TAX DEDUCTION / RATES | ||||
|---|---|---|---|---|
SR | TAXABLE | RATE OF | TAX | APPLICABLE |
1 | Where the amount of pension received does not exceed rupees ten million | Not applicable (0%) | FTR | Pension |
2 | Where the amount of pension received exceeds rupees ten million | 5% of the amount exceeding rupees ten million | ||
These rates apply to pension received by an individual from a former employer during a tax year, provided the individual is below 70 years of age. | ||||
Every person responsible for making payment for directorship fee or fee for attending board meeting or such fee by whatever name called, shall at the time of payment, deduct tax at the rate of twenty percent of the gross amount payable.
WITHHOLDING TAX DEDUCTION / RATES | ||||
|---|---|---|---|---|
SR | TAXABLE | RATE OF | TAX | APPLICABLE |
1 | Directorship fee, BoD's meetings or any amount received | 20% of the gross amount payable | FTR | - |
Provided that in case of an individual deriving income chargeable under the head “Salary”, a surcharge shall be payable at the rate of nine percent of the income tax imposed under Division I of Part I of the First Schedule where the taxable income exceeds rupees ten million in a tax year.
SURCHARGE | ||||
|---|---|---|---|---|
SR | TAXABLE | RATE OF | TAX | APPLICABLE |
1 | Where the taxable income exceeds rupees ten million | 9% of tax liability arising on salary | ADJ | Individual |
Under Section 149 of the Income Tax Ordinance, 2001, employers are required to deduct tax at source on salary, pension from former employers, directorship fees, and surcharge where applicable. Salary-based withholding is calculated on the employee’s estimated annual taxable income, after adjusting for tax credits and any prior deductions. Individuals whose income under the head “Salary” constitutes more than 75% of their taxable income fall under these salary tax rates.
For pensioners below 70 years of age, tax is only withheld where pension received from a former employer exceeds Rs. 10 million in a tax year.
Directorship fees and payments for attending Board meetings are subject to a flat 20% withholding rate. Additionally, individuals earning salary exceeding Rs. 10 million are liable to a 9% surcharge on the computed income tax.
Overall, Section 149 ensures proper tax collection at source across salary, pension, directorship fees, and surcharge, enabling accurate compliance within the tax year.
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