Withholding Tax on Services and Contracts Calculator Pakistan 2026-27: Section 153 Rates

Division III(2) of Part III of the First Schedule: 7% for a listed set of services such as transport, courier, hotel, security guard, engineering and car rental; 4% for IT and IT-enabled services; 15% for independent professionals such as doctors, lawyers, architects, accountants and software engineers working on their own; 1.5% for advertising by print or electronic media; 12% for terminal and port operating services by a company; and 14% for any other service. The Finance Act 2026 raised the listed-services rate from 6%, cut the rate for other services from 15% and added the professional, port and other-services paragraphs. Each doubles for a recipient not on the active taxpayers' list.

The list in Division III(2)(i): transport, freight forwarding, air cargo, courier, manpower outsourcing, hotel, security guard, software development, tracking, advertising (other than by print or electronic media), share registrar, engineering, including architectural, warehousing, non-banking finance company, data services under a PTA licence, telecommunication infrastructure (tower), car rental, building maintenance, Pakistan Stock Exchange and Pakistan Mercantile Exchange, inspection, certification, testing and training, oilfield, telecommunication, collateral management, travel and tour, REIT management, National Clearing Company of Pakistan. IT and IT-enabled services are in the same paragraph at 4%. Both rates apply only to a provider taxed on gross receipts who has not challenged that in court (the Explanation to the paragraph). For a provider that has, the paragraph gives no rate, and the one left is sub-paragraph (v), 14% for services other than those covered in sub-paragraphs (i) to (iv); the calculator applies it when that switch is ticked. FBR has not published a circular on the point that we could find. The list names engineering services including architectural services, while the 15% paragraph names architects working independently.

Division III(3): 7.5% of the gross amount where a company executes the contract, 8% for anyone else and 15% for a contract signed by a sportsperson. A "contract" here excludes contracts for the sale of goods or for services, which have their own rates. On Rs 1,000,000 a company contractor has Rs 75,000 deducted and a firm Rs 80,000.

Yes. Section 153(3) makes tax deductible under section 153(1) and (2) minimum tax: the recipient's tax on that income cannot be less than the deduction, and if tax worked out in the normal way is higher the difference is payable. The deduction is credited against the year's tax (section 168), but as minimum tax it is not refundable. The only adjustable case outside goods is a contract executed by a public company listed in Pakistan (proviso (c)).

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. The buyer deducts when it pays, advances included, deposits the tax (section 160), gives a certificate (section 164) and reports it in its withholding statements (section 165). A buyer that fails to deduct can be made to pay the tax itself after a hearing (section 161), and the expense is disallowed in its own accounts until the tax is paid (section 21(c)). Payments to non-residents fall under section 152.

Yes. Section 153(1) deducts from the gross amount payable, including sales tax, so provincial sales tax on the invoice is part of the base. Enter the invoice total.

Not where the year's total stays below Rs 30,000. Section 153(1) puts the duty on every prescribed person making a payment to a resident person, except where the payment for services is less than Rs 30,000 in aggregate during a financial year, so the test is this buyer's total payments to that provider for services over the financial year. If the total reaches Rs 30,000, 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. There is no such limit for contracts.

Section 153(2): an exporter or export house paying for stitching, dyeing, printing, embroidery, washing, sizing or weaving deducts 1.25% (Division IV(3)), raised from 1% by the Finance Act 2026. FBR's rates card for tax year 2027 still prints 1%; the Ordinance prevails.

Yes. Tenth Schedule rule 1 increases every rate by one hundred percent for a recipient not on the active taxpayers' list: other services go from 14% to 28%, so on Rs 1,000,000 the deduction is Rs 280,000 instead of Rs 140,000.