ISLAMABAD: Federal Board of Revenue has announced exemptions for federal and provincial governments, foreign diplomats, diplomatic missions and individuals entitled to privileges under the United Nations (Privileges and Immunities) Act through an SRO 17(I)/2014.
Sources said that exemptions are announced on payment of 10 percent withholding tax on functions in hotels/marriage halls and 5 percent tax on fee paid to educational institutions in Pakistan.
The provisions of section 236I and 236D shall also not apply to the person who is a non-resident and furnishes copy of passport as an evidence to the educational institution that during previous tax year, his stay in Pakistan was less than 183 days; furnishes a certificate that he has no Pakistan-based source of income and fee is remitted directly from abroad through normal banking channels to the bank account of the educational institution.
Under section 236I (advance tax on payment of fee to educational institutions), every educational institution is required to collect advance income tax at the rate of 5 percent on amount of fee paid to an educational institution. The person responsible for preparing monthly, bimonthly or quarterly fee voucher or challan shall also charge withholding tax in case the fee exceeds Rs 200,000 annually.
Section 236D of the Income Tax Ordinance 2001 provides for collection of adjustable income tax from a person arranging or holding a function in a marriage hall, marquee, hotel, restaurant, commercial lawn, club, a community place or any other place used for such purpose. Where food, service or any other facility is provided by the same place, the prescribed person shall collect the income tax at the rate of 10 percent on the total amount of bill from the person arranging such function.