Business & Corporate · Withholding agents · Tax Year 2026-2027
Sales Tax Withholding Calculator
Invoicing government or a large company? They keep part of the sales tax back and deposit it themselves. See exactly what reaches your account — and what you still owe on your own return.
Step by step
How the two bases work
Establish the supplier's status
Registered suppliers charge sales tax; unregistered ones cannot. That single fact picks the basis.
Registered: hold back part of the tax
A fraction of the sales tax on the invoice is retained and deposited by the buyer.
Unregistered: deduct from the gross
No tax is charged, so a percentage of the value of the supply is deducted instead.
Pay, deposit, and certify
The supplier gets the balance; the agent deposits the withheld amount and issues the certificate that supports the supplier's credit.
Reading the result
The supplier does not lose it — but cash flow moves
Sales tax withheld by your customer is still credited to you. It is deposited against your registration and appears in your return, so nothing is forfeited.
What changes is timing. You have raised an invoice including sales tax and received part of that tax as a credit rather than as cash. For a supplier already carrying input tax, that can mean paying suppliers in cash while holding a growing credit balance.
Two bases, and they are not interchangeable
Withholding can be computed on the sales tax amount or on the gross value depending on the category of supplier and agent. Applying the wrong basis gives a figure in the right region and the wrong amount, and it is the withholding agent who answers for it.
Registration status of the supplier matters
Buying from an unregistered supplier changes the withholding treatment, and in some cases the agent withholds more. That is deliberate — it is part of what makes registration worth having. Suppliers who stay unregistered to keep things simple often find their corporate customers pricing that inconvenience back to them.
Where this stops
This is sales tax withholding only. Income tax is withheld on the same invoice under separate provisions at separate rates, and both appear on the same remittance advice.
The supply of goods withholding calculator covers the income tax side.
FAQs
Sales tax withholding FAQs
What is sales tax withholding?
A buyer designated as a withholding agent does not hand the supplier the full sales tax shown on the invoice. It keeps part of it back and deposits that part directly, so the supplier receives less cash and accounts for a smaller amount itself. It is a collection mechanism, not an extra tax — the same rupees reach the treasury by a different route.
Who is a withholding agent?
The classes are listed in the rules rather than left to judgement: federal and provincial government departments and autonomous bodies, public sector organisations, companies, exporters and certain registered recipients. If you invoice government or a large company, assume withholding applies and confirm before you build the cash flow around full payment.
Why are the two bases different?
A registered supplier charges sales tax on the invoice, so there is tax to hold back — a fraction of it. An unregistered supplier charges no sales tax at all, so there is nothing to withhold from; instead a percentage of the gross value of the supply is deducted. Applying the registered fraction to an unregistered supplier, or vice versa, is the most common error here, so the calculator makes you say which you are dealing with.
Does the supplier lose the withheld amount?
No. It is deposited on the supplier's behalf and shown against them; the supplier accounts for the balance in its own return and takes credit for what was withheld. What the supplier does lose is the cash timing — money that would have arrived with the invoice arrives, in effect, as a credit later.
Is income tax withheld on the same payment too?
Very often, yes, and the two are separate. Sales tax withholding sits on the tax element (or the gross value for unregistered suppliers), while income tax withholding on the payment for goods or services runs under its own section and rates. A single payment can carry both — model them separately rather than netting one figure.
Which rates should I use?
The fraction of sales tax withheld and the percentage deducted from unregistered suppliers are set out in the schedule and have been revised. Both fields are editable and the selector only pre-fills widely applied values; verify against the current schedule before depositing, because an under-deduction is recovered from the agent.
What if my supply is exempt or zero-rated?
There is no sales tax to withhold on an exempt or zero-rated supply. Enter a zero rate and the calculator will show that plainly — but check whether income tax withholding still applies to the payment, because it usually does.
Related tools
Filing the return behind these invoices?
Net your output tax against input tax, with the Section 8B cap applied.
Open Sales Tax Return Calculator