What is Withholding Tax (WHT)?

Withholding Tax is income tax deducted at source by the payer before making a payment to you — whether it's your employer paying salary, a bank paying profit, or a client paying for services. The deducted amount is deposited to FBR on your behalf and is adjustable against your final tax liability when you file your annual return (except for "final tax" transactions).

Complete WHT Rate Table 2025–26

TransactionSectionFiler RateNon-Filer Rate
Salary Income149Per slab (0-35%)Per slab (0-35%)
Contractor/Supplier Payment153(1)(a)4%8%
Services Payment153(1)(b)7-11%14-22%
Sale of Goods153(1)(a)4.5%9%
Rent on Immovable Property155Per rent slabPer rent slab
Profit on Debt/Bank Profit15115%30%
Dividend (Mutual Fund/Co.)15015%30%
Prize / Lottery / Bond Winnings15615%25%
Brokerage / Commission23312%24%
Import of Goods1482-5.5%4-11%
Export Proceeds (final tax)1541%1%
Property Purchase236K3%6%
Property Sale236C1%2%
Vehicle Registration (1000-2000cc)231BRs.10,000-100,000Rs.30,000-300,000
Cash Withdrawal (above Rs.50,000/day)231A0%0.6%
Electricity Bill (commercial)235Per slabPer slab (higher)
Phone/Mobile Bill23610%15%
Educational Fee (above Rs.200,000/yr)236I0%5%
Foreign Remittance through banking channel—ExemptExempt

Final tax vs adjustable tax: Most WHT is "adjustable" — it counts toward your annual tax bill and excess is refundable. But export proceeds (1%), some property transactions, and prize winnings are "final tax" — meaning no further tax is due regardless of your actual income level.

Who Deducts WHT? — Withholding Agents

Any person or entity making specified payments above the threshold is legally required to act as a "withholding agent" — deduct tax, deposit it to FBR within the prescribed time, and file a monthly/quarterly withholding statement (Annex). Common withholding agents include:

  • Employers (on salary payments)
  • Banks (on profit, cash withdrawal)
  • Companies (on supplier/contractor payments)
  • Government departments (on contracts)
  • Telecom companies (on phone bills)
  • Property registrars (on sale/purchase)

Claiming WHT Refund

If the total WHT deducted from your income during the year exceeds your actual tax liability, you can claim a refund when filing your annual return on IRIS. This commonly happens with freelancers (Payoneer/Wise WHT), salaried persons with extra deductions, and businesses with seasonal income.

Frequently Asked Questions

Is withholding tax the same as income tax?
Not exactly. WHT is a method of collecting income tax in advance, at the time of a transaction. Most WHT is "adjustable" against your annual income tax liability — meaning it's a prepayment, not a separate tax. Some specific transactions (like export proceeds) are treated as "final tax" where the WHT itself satisfies the entire tax obligation.
Why is non-filer WHT double the filer rate?
FBR introduced higher rates for non-filers (often exactly double) as a deterrent — to encourage people to file tax returns and join the Active Taxpayer List. The policy goal is to widen the tax net by making non-compliance financially costly, rather than simply penalizing late filers.
How can a business reduce its WHT burden legally?
Becoming a filer is the single biggest lever — it cuts most WHT rates in half. Beyond that, businesses can apply for an "exemption certificate" under Section 159 if their tax liability is genuinely lower than the WHT deducted, request lower-rate certificates for specific contracts, and ensure proper reconciliation during annual filing to claim refunds for excess WHT.

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