What is the withholding tax rate on services in Pakistan for 2026-27?

It depends on the service: 4 per cent for IT and IT-enabled services, 7 per cent for listed services such as transport and security, 15 per cent for independent professionals, and 14 per cent for any other service. All rates double for a supplier not on the Active Taxpayers List.

What is the withholding tax on supply of goods?

5 per cent when the supplier is a company and 5.5 per cent for an individual or association of persons, both on the ATL. Rice, cotton seed and edible oils are 1.5 per cent.

Do I deduct tax from a small payment?

Not while your payments to that supplier stay under Rs 75,000 for goods or Rs 30,000 for services in total during the financial year. Once the year's total passes the threshold, deduct tax.

What happens if the supplier is not on the ATL?

The rate doubles under rule 1 of the Tenth Schedule. A 14 per cent deduction becomes 28 per cent, for example.

Is the deduction on the amount before or after sales tax?

The deduction is on the gross amount payable. How sales tax on the bill is treated depends on the payment, so check the Ordinance and the FBR rate card, or ask your tax adviser, before relying on either figure.

Can I show the deduction on a payment voucher?

Yes. Make a payment voucher for the bill and add a note with the section, the rate, the tax withheld and the net amount paid, so the voucher matches the money that left your account.

Withholding tax calculator for Pakistan

Choose what the payment is for, who it goes to and whether they are on the Active Taxpayers List. See the tax to deduct under section 153 and what to pay the supplier.

Payment for

Paid to

Is the supplier on the Active Taxpayers List?

Gross amount payable (Rs)

The amount the deduction is worked out on.

Result

Rate: 5%
Tax to deduct: PKR 5,000.00
Pay the supplier: PKR 95,000.00

Section 153(1)(a), rate 5% (On the ATL), tax year 2027.

A supplier not on the ATL is charged double the rate.

Put this on an invoice

How withholding tax on payments works in Pakistan

When a company in Pakistan pays a supplier for goods, a service or a contract, it usually does not pay the full bill. Section 153 of the Income Tax Ordinance 2001 makes the payer deduct income tax at the time of payment, deposit it with the Federal Board of Revenue, and pay the supplier the rest. The calculator above works out that deduction for tax year 2027, which runs from 1 July 2026 to 30 June 2027.

Who has to deduct

Not every payer. The duty falls on a prescribed person, a term section 153(7) defines. It covers, among others, the federal and provincial governments, local authorities, companies, and associations of persons above certain sizes. A private individual paying a plumber is not deducting tax. If your business is a company, assume you are a prescribed person and check the definition before your first payment.

There is a floor. No deduction is needed where your payments to a supplier for goods stay under Rs 75,000, or for services under Rs 30,000, in total during the financial year. Once the total for the year passes that figure, tax applies, so keep a running total per supplier rather than looking at each bill alone.

The rates for tax year 2027

Sale of goods: 5 per cent to a company, 5.5 per cent to an individual or association of persons
Rice, cotton seed and edible oils: 1.5 per cent
Toll manufacturing: 9 per cent to a company, 11 per cent to others
Listed services, such as transport, courier, security and manpower: 7 per cent
IT and IT-enabled services: 4 per cent
Doctors, lawyers, accountants, architects and software developers working independently: 15 per cent
Advertising paid to print or electronic media: 1.5 per cent
Any other service: 14 per cent
Execution of a contract: 7.5 per cent to a company, 8 per cent to others; 15 per cent for a sportsperson

These are the rates in the FBR withholding tax rate card for tax year 2027, updated for the Finance Act 2026. Rates change with each Finance Act, usually in July. FBR Withholding Tax Rate Card 2027

Several categories overlap. A software developer working alone falls under the 15 per cent professional rate, while a firm billing IT services gets the 4 per cent rate, and the listed services category has its own conditions in the Ordinance. Where a payment could sit in two categories, the calculator cannot decide for you; read the entry in the First Schedule or ask your tax adviser.

Why a supplier off the ATL pays double

The Active Taxpayers List is the FBR's list of people and businesses that filed their return. Rule 1 of the Tenth Schedule increases the withholding rate by a hundred per cent for anyone not on it, so 5 per cent on goods becomes 10, and 14 per cent on services becomes 28. Check a supplier's status on the FBR's ATL search before you pay; a filer who appears on the next list goes back to the normal rate.

A Rs 2,50,000 security services bill

Category: Listed services, 7 per cent
Supplier on the ATL: Deduct Rs 17,500 and pay Rs 2,32,500
Supplier not on the ATL: Deduct Rs 35,000 and pay Rs 2,15,000

The deduction is worked out on the gross amount payable. Whether that includes the sales tax on the bill depends on the payment; check the Ordinance and the rate card before relying on it.

Recording the deduction

Work out the tax when you make the payment, on the gross amount payable.
Pay the supplier the net amount and deposit the tax with the FBR within the time the law allows.
Give the supplier a certificate of the tax deducted, so they can claim it in their return.
Keep the bill, the payment record and the certificate together. A payment voucher with the deduction shown is the simplest way to do that.

For many suppliers, tax deducted under section 153 is a minimum tax: it is the least they pay on that income, not an advance they can always get back. Section 153(3) sets out which payments this applies to. This calculator shows the deduction only, not the supplier's final liability.

Section 153, the First Schedule Part III Division III and the Tenth Schedule of the Income Tax Ordinance 2001, as amended up to 30 June 2026. Income Tax Ordinance 2001 (FBR)

The calculator runs in your browser. Nothing you type is sent anywhere. It is a guide to the arithmetic, not tax advice; for an unusual payment, confirm the category with a tax adviser.

Sources last checked 2026-10-23

Common questions

What is the withholding tax rate on services in Pakistan for 2026-27?: It depends on the service: 4 per cent for IT and IT-enabled services, 7 per cent for listed services such as transport and security, 15 per cent for independent professionals, and 14 per cent for any other service. All rates double for a supplier not on the Active Taxpayers List.
What is the withholding tax on supply of goods?: 5 per cent when the supplier is a company and 5.5 per cent for an individual or association of persons, both on the ATL. Rice, cotton seed and edible oils are 1.5 per cent.
Do I deduct tax from a small payment?: Not while your payments to that supplier stay under Rs 75,000 for goods or Rs 30,000 for services in total during the financial year. Once the year's total passes the threshold, deduct tax.
What happens if the supplier is not on the ATL?: The rate doubles under rule 1 of the Tenth Schedule. A 14 per cent deduction becomes 28 per cent, for example.
Is the deduction on the amount before or after sales tax?: The deduction is on the gross amount payable. How sales tax on the bill is treated depends on the payment, so check the Ordinance and the FBR rate card, or ask your tax adviser, before relying on either figure.
Can I show the deduction on a payment voucher?: Yes. Make a payment voucher for the bill and add a note with the section, the rate, the tax withheld and the net amount paid, so the voucher matches the money that left your account.