Withholding tax filing refers to the process of reporting and remitting withholding taxes on behalf of taxpayers. In Pakistan, withholding tax is deducted by the payer (also known as the withholding agent) from certain types of payments and is then remitted to the Federal Board of Revenue (FBR) on behalf of the recipient.
Here are the general steps for withholding tax filing:
Identify Withholding Tax Obligations:
- Determine the types of payments for which you are required to withhold tax. Common types of payments subject to withholding tax in Pakistan include salaries, contracts, dividends, interest, royalties, and commissions.
Obtain a Withholding Tax Number (WHT):
- If you do not have a Withholding Tax Number, register for one with the FBR. You can do this through their online portal or by visiting the nearest tax facilitation center.
Collect Withholding Tax:
- Deduct the applicable withholding tax from the payment you are making to the recipient. The tax rates and withholding categories will depend on the nature of the payment and are specified by the FBR.
Maintain Withholding Tax Records:
- Depending on the nature of your business, you may need to register with the respective Provincial Revenue Authority for additional taxes, such as the Punjab Revenue Authority (PRA) or the Sindh Revenue Board (SRB). Check with the relevant authority in your province.
Generate Withholding Tax Certificates:
- Prepare withholding tax certificates (commonly known as Form 15) for each recipient. These certificates provide evidence of the tax deducted and are usually provided to the recipient within a specified timeframe.
Prepare Withholding Tax Statements:
- Compile all the withholding tax deductions made during a specific period (e.g., monthly, quarterly, or annually). Prepare a withholding tax statement (commonly known as Annex-A) summarizing the total tax deducted from all payments.
File Withholding Tax Returns:
- Access the FBR's online portal or designated tax filing system to file the withholding tax returns. Provide the required details from the withholding tax statements and complete the filing process. The frequency of filing will depend on the tax period prescribed by the FBR.
Remit Withholding Tax Amount:
- Pay the total withholding tax amount to the designated bank branch authorized by the FBR. Ensure that the payment is made within the specified deadline.
Retain Records and Documentation:
- Maintain copies of the filed withholding tax returns, withholding tax statements, and payment receipts. It is recommended to keep these records for a specified period as required by tax laws.
