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).
Main guide: for the complete overview, see our withholding tax rate card.
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.
Withholding Rates We Can Confirm for 2026-27
Withholding rates change every budget, and many are set in detailed slabs by category. Below are figures we use for the current year. For anything not listed, we check FBR's Withholding Tax Regime Card for the tax year before advising.
| Transaction | Section | On the Active Taxpayers List | Not on the list |
|---|---|---|---|
| Buying immovable property (transfers from 1 July 2026) | 236K | 1.25% | 2.5% |
| Selling immovable property (transfers from 1 July 2026) | 236C | 2.75% | 5.5% |
| Prize bond winnings | 156 | 15% | 30% |
| Lottery and similar prizes | 156 | 20% | 40% |
| Online sales paid digitally (e-commerce collection) | E-commerce provisions | 1% | — |
| Online sales paid cash on delivery | E-commerce provisions | 2% | — |
Adjustable, Minimum or Final?
Every deduction falls into one of three groups, and the group decides whether a refund is possible:
- Adjustable deductions are advance payments. If they exceed your tax, the excess can be refunded.
- Minimum tax deductions cannot be refunded even if your actual tax is lower, though higher actual tax is still payable.
- Final tax deductions settle the tax on that income completely; the income is not added to your other income.
The same payment can fall into different groups for different taxpayers, for example a company versus an individual.
Where to Find the Official Rates
FBR publishes a Withholding Tax Regime Card after each Finance Act, listing sections, rates and the withholding agent for each transaction. It is the most reliable single source; social media tables are often a year out of date.
Checking a Deduction on Your Account
Every deduction made against your CNIC or NTN appears in your IRIS profile and on the tax certificate from the withholding agent. Compare the two before filing so nothing is missed.
Frequently Asked Questions
What is the advance tax on buying property in 2026-27?
For transfers from 1 July 2026, 1.25% under section 236K for buyers on the Active Taxpayers List and 2.5% for others.
What is withholding tax on prize bond winnings?
15% for persons on the Active Taxpayers List and 30% for others, collected as final tax.
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.
Need Help With WHT Compliance?
We handle withholding statements, exemption certificates, and refund claims for businesses across Pakistan.
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