Withholding Tax on Supply of Goods Calculator Pakistan 2026-27: Section 153(1)(a) Rates and Minimum Tax

Division III of Part III of the First Schedule sets 5% of the gross amount payable where the supplier is a company and 5.5% for any other supplier; toll manufacturing is 9% for a company and 11% otherwise, and rice, cotton seed oil and edible oils are 1.5% for everyone. A supplier not on the active taxpayers' list pays double (Tenth Schedule rule 1): 10% for a company. FBR's withholding tax rates card for tax year 2027 prints the same figures.

Yes. Section 153(1) deducts it from the gross amount payable, including sales tax. On goods priced at Rs 1,000,000 plus 18% sales tax, a company supplier on the active list has Rs 59,000 deducted from Rs 1,180,000, not Rs 50,000 from Rs 1,000,000, and receives Rs 1,121,000.

Minimum tax for most suppliers (section 153(3)): their tax on that income, the amount on which tax was deductible, cannot be less than the deduction, and if tax worked out in the normal way is higher they pay the difference. Every deduction is credited against the year's tax (section 168), but under minimum tax nothing is refunded. It is adjustable, with any excess over the year's tax refundable on an application made within three years (sections 168(5) and 170), where the supplier is a company manufacturing the goods or a public company listed in Pakistan (proviso (a)), or an SME under the Fourteenth Schedule, a manufacturer with turnover up to Rs 250,000,000 (rule 8). Manufacturing includes any process converting articles into a distinct article, and assembling, mixing, cutting or otherwise preparing goods (section 153(7)(iv)); the exception covers the goods the company makes, not goods it buys in and resells. A company doing toll manufacturing is covered: section 153(1)(a) treats toll manufacturing as a sale of goods, and the company performs the manufacturing process on them. An individual or AOP doing toll manufacturing stays on minimum tax, because the exception is for companies.

A "prescribed person" under section 153(7): the Federal Government, a company, an association of persons constituted by or under law, a non-profit organization, a foreign contractor or consultant, a consortium or joint venture, an individual or association of persons with turnover of Rs 100,000,000 or more in any preceding tax year, a sales tax registered person with the same turnover, and builders and developers. Turnover here includes sales tax, federal excise duty and trade discounts shown on invoices (section 153(7)(v)). A company deducts whatever its size; an individual or an unincorporated association below the turnover test, such as a walk-in customer, does not. The buyer deducts at the time of payment, pays the tax to the government (section 160), gives the supplier a certificate (section 164) and reports it in its withholding statements (section 165); if it fails to deduct, it is liable for the tax itself (section 161). Payments to non-residents fall under section 152 instead.

Not where the year's total stays below Rs 75,000. Section 153(1) puts the duty on every prescribed person making a payment to a resident person, except where the payment for goods is less than Rs 75,000 in aggregate during a financial year, so the test is this buyer's total payments to that supplier for goods over the financial year, not a single invoice; a total of exactly Rs 75,000 is not below the limit. If the total reaches the limit, the exception does not apply and every payment in the year was deductible; earlier payments made without deduction are then the buyer's liability under section 161.

Section 153(5) excludes a sale by an importer who paid tax under section 148 on the goods and sells them in the same condition, a refund of a security deposit, a payment by the Federal, a Provincial or a Local Government to a contractor for construction materials it supplied, a lease-and-buy-back purchase by a modaraba, leasing company, bank or financial institution, and payments for securitization or sukuk issuance by a special purpose vehicle to the originator. Where the deduction is not minimum tax, the Commissioner can allow a reduced rate on application, cut by no more than 80% of the schedule rate, or nil for a public limited company (section 153(4)).

Yes. Tenth Schedule rule 1 increases the rate by one hundred percent for a supplier not on the active taxpayers' list: 10% for a company and 11% for anyone else on ordinary goods, 18% and 22% on toll manufacturing, and 3% on rice and edible oils. On Rs 1,180,000 a company off the list has Rs 118,000 deducted instead of Rs 59,000.