Withholding Tax Rate on Services in Pakistan – 2025 Guide
Withholding Tax (WHT) is a key component of Pakistan’s tax system, where the payer deducts tax at the time of payment for specified services and deposits it with the Federal Board of Revenue (FBR). This advance tax collection helps broaden the tax net and ensure compliance. In 2025, the withholding tax rate on services in Pakistan varies based on the type of service, the filer status, and the nature of the transaction.
💼 General Services Subject to Withholding Tax
Under Section 153(1)(b) of the Income Tax Ordinance, 2001, withholding tax is applicable on payments for:
Professional services (law, IT, consultancy, engineering)
Technical services
Contractual services (advertising, security, manpower supply)
Other specified services like hotel management, courier, etc.
📊 Withholding Tax Rates on Services (2025)
Status of PayeeWHT Rate on ServicesFiler (Active Taxpayer)15%Non-Filer (Inactive)30% (Double rate)
These rates are applicable on the gross amount payable.
In certain cases (e.g., telecom services or digital platforms), reduced or specific rates may apply.
🧾 Key Rules and Provisions
Deduction Timing: WHT must be deducted at the time of payment or credit, whichever is earlier.
Deposit Timeline: The deducted amount must be deposited to FBR within seven days of deduction.
Certificate Issuance: The deductor must issue a withholding certificate (WHT Certificate) to the service provider.
Filing Responsibility: Deducting entities are required to file monthly statements (STRs) under Section 165.
❗ Important Exceptions & Clarifications
Individual consumers (non-business persons) are generally not required to deduct withholding tax.
Non-resident service providers may fall under Section 152, with different rates depending on the double tax treaties.
Reduced rates or exemptions may be available for exporters, non-profits, or under FBR SROs.
📌 Penalties for Non-Compliance
Failure to deduct or deposit withholding tax on services may result in:
Disallowance of expenses in tax returns
Penalties and default surcharges
Possible audit or enforcement action by the FBR
✅ Conclusion
The withholding tax rate on services in Pakistan is typically 15% for filers and 30% for non-filers, making it crucial for service providers to appear on the Active Taxpayers List (ATL). Businesses must stay compliant by deducting WHT on time, depositing it to the FBR, and issuing certificates accordingly