ISLAMABAD: Federal Board of Revenue (FBR) has decided that advance tax will not be collected on an amount paid as scholarships by educational institutions, it is learnt here.
According to official sources, under Section 2361 of the Income Tax Ordinance, 2001, a person preparing a fee voucher or challan was obliged to collect/charge advance tax at rate 5% from a person on the amount of fee paid to an educational institution such as schools, colleges, universities, tuition centers etc.
However, such advance tax under Section 2361 of the ordinance was not to be collected in instances where annual fee was up to Rs200,000, sources added.
Sources further added that amount aid as scholarship not to be subject to collection of advance tax by educational institutions also for the person who is a non-resident, subject to the furnishing of various documentations.
It is important to mention here that the board has made amendment made in Sub-Section (3) of Section 2361 of the ordinance through the Finance Act, 2018 in order to alleviate the hardship of persons whose educational fees are being paid through a scholarship.
