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Rates of WHT on profit on debt updated for tax year 2021

Rates of WHT on profit on debt updated for tax year 2021

ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding tax rates on profit on debt to be prevailed during Tax Year 2021. The FBR issued withholding tax card 2020/2021 after incorporating changes made through Finance Act, 2020.

The rates of withholding tax on profit on debt under Section 151 of Income Tax Ordinance, 2001 to be collected by person making payment of profit/yield from recipients of (profit on debt) at the time the yield (profit on debt) is credited to the account of the recipient or is actually paid, whichever is earlier.

According to the tax card:

Section 151(1)(a) Yield or profit (profit on debt) on account, deposits or a certificate under the National Saving Schemes or Post Office Saving Account

Up to Rs500,000 the tax rate shall be 10 percent of the gross yield/profit paid

Exceeding Rs500,000 the tax rate shall be 15 percent of the gross yield/profit paid and 30 percent if the person is not on the Active Taxpayers list (ATL).

The FBR said that it shall be minimum tax on the profits on debt arising to a taxpayer, except where-(a) Taxpayer is a company; or (b) Profit on debt is taxable u/s 7B.

Under Section 151(1)(b) banking company or financial institution shall collect the withholding tax from recipient of profit on debt at the time the profit on debt is credited to the account of the recipient or is actually paid, whichever is earlier.

The tax rate shall be 10 percent of the gross yield / profit on debt on payment of up to Rs500,000.

On amount exceeding Rs500,000 the tax rate shall be 15 percent of the gross yield / profit on debt and it shall be increased by 100 percent in case person is not on the ATL.

The FBR said that the tax shall be minimum tax on the profits on debt arising to a taxpayer, except where- (a) taxpayer is a company; or (b) profit on debt is taxable u/s 7B.

Under Section 151(1)(c) the federal/provincial government/local authorities shall collect tax on profit on securities, other than those mentioned in Section 151(1)(a), issued by federal/provincial government or a local government from recipient of (profit on debt) at the time the profit on debt is credited to the account of the recipient or is actually paid, whichever is earlier.

The tax rate shall be 10 percent of the gross yield/profit paid on amount up to Rs500,000.

On amount exceeding Rs500,000 the tax rate shall be 15 percent of the gross yield/profit paid, the tax rate shall be increased by 100 percent in case person is not on the ATL.

The FBR said that the tax shall be minimum tax on the profits on debt arising to a taxpayer, except where-(a) taxpayer is a company; or (b) profit on debt is taxable u/s 7B.

Under Section 151(1)(d) banking company, a financial institution, a company or finance society shall collect withholding tax on profit on bonds , certificates, debentures, securities or instruments of any kind (other than loan agreements between borrowers and banking companies or development financial institutions) from recipient of profit on debt at the time the profit on debt is credited to the account of the recipient or is actually paid, whichever is earlier.

The tax rate shall be 10 percent of the gross yield/profit paid on amount up to Rs500,000.

On amount exceeding Rs500,000 the tax rate shall be 15 percent of the gross yield/profit paid, the tax rate shall be increased by 100 percent in case person is not on the ATL.

The FBR said that the tax shall be minimum tax on the profits on debt arising to a taxpayer, except where-(a) taxpayer is a company; or (b) profit on debt is taxable u/s 7B.