ISLAMABAD: Federal Board of Revenue (FBR) has decided to deduct 17.5 per cent withholding tax from non-filers of annual income tax return on profit derived from bank deposits, government securities or saving schemes.
According to withholding tax card for year 2017/2018, the FBR said that a person paying profit / yield has to deduct tax from the gross amount of yield or profit at: 10 percent of the gross yield paid to return filers; 10 percent of the gross yield paid up to Rs500,000 in case of non-filers; and 17.5 percent of the gross yield paid in case of other non-filers.
The deduction will be made under Section 151 of the Income Tax Ordinance, 2001.
The similar rates are applicable on:
Section 151(1)(a): Yield or profit (profit on debt) on account, deposit or a certificate under the National Saving Schemes or Post Office Savings Account.
Section 151(1)(b): Profit on debt paid by banking company or financial institution on account or deposit maintained.
Section 151(1)(c): Profit on securities, other than those mentioned in Section 151(1)(a), issued by federal / provincial government or a local government.
Section 151(1)(d): Profit on bonds, certificates, debentures, securities or instruments of any kind (other than loan agreements between borrowers and banking companies or development financial institutions).
The FBR said that the tax withheld under this section will be treated a final tax except where (i) taxpayer is a company (ii) profit on debt is taxable under section 7B of the Ordinance.
