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.