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FBR updates withholding income tax rates for exporters

FBR updates withholding income tax rates for exporters

ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding income tax rates for exporters for tax year 2021.

The FBR updated withholding tax card for 2020/2021 after incorporating amendments made to Income Tax Ordinance, 2001 brought through Finance Act, 2020.

Under Section 154 of Income Tax Ordinance, 2001 every authorized dealer in foreign exchange required to collect / deduct withholding tax from exporters at the time of realization of the export proceeds.

The withholding tax rate under Section 154(1) shall be one percent of the gross value.

The tax shall be final.

Under Section 154(2) every authorized dealer in foreign exchange is required to collect/deduct withholding tax from non-export indenting agent, export indenting agent/export buying house at the time of realization of foreign exchange proceeds or indenting commission.

The tax rate under this section shall be on realization of proceeds on account of commission to;

  1. Non-export indenting agent: 5 percent of gross value
  2. Export indenting agent / export buying house: 5 percent of gross value

The tax shall be final tax liability.

Under Section 154 (3), every banking company is required to collect/deduct tax from exporters at the time of realization of proceeds on account of sale of goods to an exporter.

The tax rate shall be one percent on realization of proceeds on account of sale of goods to an exporter under inland back to back LC or any other arrangement as may be prescribed by FBR.

The tax shall be final tax liability.

Under Section 154 (3A), Export Processing Zone (EPZ) authority is required to collect / deduct withholding tax from industrial undertaking located in the export processing zone at the time of export of goods.

The tax rate shall be one percent and this is final tax liability.

Under Section 154(3B), direct exporters/export house registered under DTRE Rules 2001 required to collect/deduct withholding tax from indirect exporters (defined under sub-chapter 7 of the chapter XII of the Customs Rules, 2001) at the time of payment against a firm contract.

The tax rate is one percent of the gross value and it is final tax liability.

Under Section 154(3C), the collector of customs is required to collect withholding tax at one percent from exporter of goods at the time of export of goods. This tax shall be final tax liability.