Basic Withholding tax rates

FBR has revised its withholding income tax rates

If a withholding agent is deducting income tax it shall consider whether the service provider,contractor or supplier is a company or not and if it is a company it shall deduct income tax as under:

For Services @ 6% of payable amount

For Supply of goods @ 3.5% of payable amount

For Contracts @6% of payable amount.

For any other entities:

For Services @ 7%

For Supply of goods @ 4%

For Contracts @ 6.5%

For travelling agents:

While payment to travel agents for local and international air tickets the rates are 10% of the commission amount.

For advertising agents:

If you are paying for advertisement expense on newspaper then you shall deduct 10% income tax on the commission amount of advertising agent.

If you don’t know the commission amount the workout using the following method:

If total invoice for advertisement is Rs. 100,000 then media is usually 85% and agent commission is usually 15%. This mean Commission amount in this case is Rs. 15,000.

Now assume that the agent provide you discount of 5% on total advertisement bill, then you will receive discount of Rs. 5,000 (100,000*5%). Now the remaining commission with the agent is of Rs. 10,000 (15,000-5,000). you will deduct Rs. 1,000 (10,000*10%) as income tax while paying the advertising agent.

 

 

Is accounting and bookkeeping same?

If you are posting any transactions in your ledgers,software, spreadsheet package or any book, does that mean you are accounting? The answer will simply be NO because what you are doing is not an accounting instead it is book keeping. The book keeping doesn’t make you an accountant. However when you produce and present the information you have entered into any reports like profit and loss account and balance sheet you are accounting.