Withholding Tax Rates in Pakistan according to the Finance Act 2025 is varied, with 5 per cent. on goods sold by companies, 4 per cent. on IT services and 15 per cent. on dividends and rent. Non-filer rates are generally 100 percent more than the rates on the Active Taxpayers List (ATL). Highlights are salary (0% -35%), and a 5.5% withholding on imports.
Latest Withholding Tax Rates in Pakistan
In Pakistan, there is withholding tax applied to many forms of income at the source such as salary, business income, dividends and interest. These rates will depend on the character of the income, the status of the taxpayer (resident or non-resident individual or corporate) and the status of the taxpayer (individual or corporate). The following are the most important withholding tax rates in Pakistan:
Salary Income
In the case of the salaried, the deductions made to withhold tax are at progressive tax slabs, depending on income levels. The rates vary between 0 per cent and 15 per cent, depending on the earned amount.
Dividend Income
Residents: 15 % withholding tax.
Non-residents: 15 percent also, and this can be lessened in the event of a tax agreement.
Interest Income
Residents: 15 % withholding tax.
Non-residents: 20 per cent withholding tax except there may be a reduced rate in a tax treaty.
Royalty Income
Residents: 15 % withholding tax.
Non-residents: 15 percent too, which may be slated down depending on a tax treaty.
Contractor Payments
Withholding tax rate of contractors (individuals or firms) is dependent on the contract nature and nature of work. Rates range from 3 % to 12 %.
Rental Income
Residents: 10% tax on the individual and companies.
Non-residents: 15 per cent withholding tax.
Payments to Non-Residents
In case of services or technical services offered by non-residents, the standard rate of withholding tax is 15%. Certain rates can be differentiated by the type of service in relation to tax treaties.
Capital Gains
non residents are subject to the withholding tax rate of 10 percent on the sale of immovable property.
To the resident, it can be between 2 per cent and 15 per cent based on the holding period.
Other Payments
Other payments like commissions, brokerage and professional fees also require a withholding tax, and this tax is usually 10 -20 per cent on non-residents.
Pakistan can have these rates affected by double-taxation treaties with other nations. The terms of the agreements may allow non-residents to receive low withholding tax rates. One should always seek the services of a tax professional in order to comply correctly and effectively with the withholding tax requirements.
Key Corporate and General Withholding Tax Rates in Pakistan (2026)
Sale of Goods: 5% for companies, 5.5% for others.
Services: 6% for specified services, 4% for IT/IT-enabled services.
Toll Manufacturing: 9% for companies, 11% for others.
Contracts: 8% for companies, 16% for others.
Rent of Immovable Property: 15%.
Dividends: 15%.
Profit on Debt: 15% (for residents).
Imports: 5.5% of import value plus duties/taxes.
Salary Taxation (Withholding)
Up to Rs. 600,000: 0%.
Rs. 600,001 – Rs. 1,200,000: 1% of amount exceeding Rs. 600,000.
Rs. 1,200,001 – Rs. 2,200,000: Rs. 6,000 + 11% of amount exceeding Rs. 1,200,000.
Higher slabs (up to Rs. 4.1 million+) range from 23% to 35%.
Surcharge: A 9% surcharge applies to salary tax liability if annual income exceeds Rs. 10 million.
Purpose and Importance of Withholding Tax
The primary goal of WHT is to make tax collection easier and minimize tax evasion and maintain a stable flow of revenue in the government. It ensures that payment of tax is partially paid at the time of payment and hence it is easier to the people and the businesses to obey as it helps the Pakistan fiscal stability.
Entities Responsible for Deduction
Withholding tax is deduced by various entities and these include:
- Employers through remunerations.
- Interest and other financial gain Banks.
- Firms on dividend or payment to contractors.
- Users who pay their service providers or freelancers.
These institutions are agents of the source deduction and remittance of the tax to the FBR.
FBR’s Role in Managing Withholding Tax
In Pakistan, the withholding taxes are regulated, observed, and collected by the Federal Board of Revenue (FBR). FBR offers instructions on rates, exemptions, format of reporting and payment due dates through its online IRIS portal and tax notifications which guarantee consistency, minimizing revenue leakages.
How Withholding Tax Works in Pakistan
Tax Deduction Mechanism
In Pakistan, withholding tax (WHT) is paid at the point of payment by the payer even before the recipient of the income takes the income. This system is done so that some part of the salaries, dividends, or bank interest is paid initially and deposited to the Federal Board of Revenue (FBR).
Difference Between Withholding Tax and Income Tax
Calculation of income tax is done based on the earnings made annually and withholding tax is taken at the point of origin before the funds reach the tax payer. WHT cuts the amount of the final income tax, which serves as a pre-payment of the annual amount.
Advance Payment of Tax Liability
The government is able to collect the tax in bits by subtracting WHT in the source, this minimizes the chances of underreporting or tax evasion. Taxpayers included in the annual income tax filing may offset the deducted WHT against their entire liability, and receive refunds in case the withheld amount of taxes was excessive.
Example
- Salary: WHT is calculated on the monthly salary by an employer who then deduces it.
- Dividends: Firms do not charge tax on dividend disbursements to shareholders.
- Bank Interest: This is the WHT deducted by the banks on the interest accrued by people on their accounts before the account can be credited.
- The system will make sure that the taxpayers pay what is owed by them in a slow and well-organized way, making them easier to comply with and collect revenue.
Withholding Tax Rates in Pakistan (2025)
Overview of Updated FBR Withholding Tax Rates
In a move to make sure the taxes of all sources of income are fairly collected, the Federal Board of Revenue (FBR) has revised the withholding tax (WHT) rate as at 2025. The rates are charged on individuals, companies and other parties that obtain income in the form of salaries, dividends, bank profits, or service payments. These rates are vital in terms of compliance and proper tax planning.
Breakdown of Major Categories Where WHT Applies
Salaries and Compensation
- WHT is calculated by employers through deduction of monthly payrolls on progressive tax brackets of individuals.
- There is a risk that the rate of deduction will be increased on non-filers.
- Bank Profits and Interest
- WHT is deducted by banks on the interest on savings accounts or on fixed or other deposits.
- Filer and non-filers receive different rates where filers receive lower rates.
Dividends
- Firms allow deductions of WHT on dividends paid to shareholders.
- The tax treaties have the potential to affect rates, which vary between resident and non-resident shareholders.
Business and Contract Payments
- WHT is applicable to the payments to contractors, suppliers and service providers.
- Rates to be applied are based on industry, nature of service and FBR notifications.
Other Payments
- WHT can also apply to rent, royalties and commissions payments, it is subject to taxpayer classification and the status of the filers.
- By keeping abreast with the prevailing WHT rates, businesses and individuals can easily compute their tax liability correctly, avoid penalties and claim tax credit when they file their annual returns.
Salary and Employment Income
In the case of salaried people in Pakistan, the employer is required to deduct withholding tax (WHT) on gross salary prior to its payment on a monthly basis. This makes sure that the tax is collected slowly by the government and this reduces the chances of underreporting and missing payments.
Withholding Tax Rates in Pakistan of Salaried Persons
- The taxation of salaries is in accordance with tax slabs of progressive income tax that is announced by the FBR during the tax year.
- The tax is computed on a monthly basis and adjusted at the end of the financial year on which annual income tax return will be submitted.
Variation between Filers and Non-filers
- Filers: The registered people with an NTN (National Tax Number) are entitled to reduced WHT.
- Non-filers: Non-filers are groups that have never registered or paid taxes; they are given an increased rate of deduction as a penalty and this motivates them to eventually register and obey.
- These WHT rates allow employees who are paid salaries to be aware that they can make correct tax deductions, file on time and receive a refund or tax credit at the end of the year.
Bank Profit and Interest Income.
- The withholding tax (WHT) applies to freelancers, salaried persons and businesses in Pakistan making a profit or interest on bank deposits. This includes the savings account earnings, fixed deposits and other investments in deposits.
- The banks are deducting WHT when they credit the profit into the account, and remitting it to the Federal Board of Revenue (FBR).
WHT Rates for Filers and Non-Filers (Finance Act 2025)
- Filers Taxpayers registered with the FBR who have a National Tax Number (NTN) receive a reduced WHT rate.
- Non-filers: Individual or entities with no NTN are subject to a higher rate of deductions which serves as a compliance incentive.
- These precise rates of WHT can also change depending on the type of account, the amount of profit, and the FBR notifications provided in accordance with the Finance Act 2025. It would require accurate record keeping of the bank statements and the transaction receipts that would be reconciled and claim tax credits when filing annual returns.
- Good knowledge of such rates will assist the taxpayers to prevent over-payment, to comply and taking advantage of the tax liability in a legal manner.
Dividend and Shareholder Income
In Pakistan, companies are not supposed to charge tax on dividends and shareholder income prior to making payments to the recipient. This maintains compliance of companies with the FBR rules and pre-collected tax of returns on investments.
WHT on Dividend Distributions.
- WHT should be eliminated by listed companies in the Pakistan Stock exchange at the rates determined by the FBR in the Finance Act 2025.
- Unlisted companies are also required to pay WHT prior to distribution of dividends with rates differing according to company group and type of income.
Effects of Filer Status and Company Category.
- Lower WHT rates are given to filers, or shareholders who are registered with FBR having an NTN.
- The rates are increased on non-filers, which creates incentives to register and comply.
- The status of a company listed or unlisted, resident or non-resident is also a factor governing the rates of WHT.
- Maintaining good dividend records and receipt of shareholders enables you to obtain tax credits and to balance your accounts under annual filing.
Contractor, Supplier and Service Payments.
WHT also applies to contractor, supplier and service payments via FBR rules. Paying- It is the payer, typically a company or organization, which deduces the tax amount when the payment is made and remits it to the FBR.
Withholding Tax (WHT)Â for Resident Entities
WHT remunerations on resident contractors and service providers are governed by the Finance Act 2025. The rates are set according to service type, industry, and the status of the user i.e. filer or non-filer.
Withholding Tax Rates in Pakistan for Non-Resident Entities
WHT is also applied to non-resident contractors, suppliers or consultants. The rates might vary in accordance with tax treaties in order to prevent double taxation.
The payer and payee should have clear invoices, contracts and payment records. Proper documentation makes sure that there is proper tax reporting, credits, and even the annual return can be reconciled.
Real Estate Sales and Rents.
WHT also taxes property sales and rental revenue in Pakistan. The buyer or the tenant who is the payer will have to withhold the tax and hand it over to the FBR.
Property Transactions and Rental Income
In the case of selling a property, they deduct a portion of its value in form of tax. The rate differs depending on property type of residence, commercial, or agricultural property and the status of the filer by the seller.
Withholding Tax (WHT) on Rental Income
Rental payments are liable to WHT at the end of every month or year. The lower rates are applied to registered filers; higher rates to non-filers and this promotes registration.
Retain sale documents, rental documents and bank statements to have documents and claim tax credits on your annual returns. Use FBR updates to compute properly and not receive fines.
Imports and Exports
WHT also includes imports and exports in Pakistan. The importers and exporters must observe FBR regulations to pay the appropriate tax and to be eligible to receive the potential exemptions.
WHT on Imported Goods
At the ports, the importers are required to pay WHT which is as a percentage of the value of the goods in form of custom. The rates vary according to the type of goods, the country of origin and the status of filer.
Withholding Tax (WHT) on Export Income
WHT may also be imposed on exporters who are paid in a foreign currency. Exporters registered under the export promotion schemes or those registered with PSEB can enjoy full or partial exemption depending on the announcements of FBR and incentives provided by sector.
Record accurate import/export notices, invoices and bank records to take exemptions, file your annual return and remain in compliance of the FBR rules.
Withholding Tax Rates in Pakistan for Filers vs Non-Filers
Definition of Filer and Non-Filer
A filer refers to any person registered by the FBR, with a valid NTN, and possessing all the filing obligations.
A non-filer does not even register with FBR and do not file the necessary annual returns.
Impact on Withholding Tax
Non-filers will incur a greater amount of WHT on the majority of transactions-salaries, bank earnings, property sales, vehicle registrations to motivate them to file.
Example Comparison
Transaction Filer Rate Non- Filer rate.
- Bank Profit 15% 20%
- Vehicle Registration Fee 2% 5%
- Property Sale / Transfer 2% 5%
- Benefits of Becoming a Filer
- Reduced WHT rates mean a lower tax bill.
By remaining in compliance, one avoids fines and penalties.
- You have increased access to bank loans, international contracts and other financial services.
- You can get a refund and credit after filing on an annual basis.
- FBR registration will ensure the financial efficiency of operations and manifest itself as a means of trust in all business and personal relations.
Understanding Withholding Tax Rates for Pakistani Businesses
Deferral of tax in Pakistan is a fundamental component of tax regime as businesses and individuals pay tax on the income received. To businesses, the various withholding tax rates are important to know both as a way of complying and also paying less tax. The key rates imposed on Pakistani enterprises include:
Income from Business (Contractors, Professionals, and Services):
Contractors, professionals, or any service provider paid by businesses are required to withhold tax. Prices vary according to the nature of service or contract:
– Contractors: 3-12 percent, based on the type of contract and the taxpayer.
– Work of a professional (e.g., a lawyer, consultant): 10%.
Dividend Income:
When a business is paid dividends by another company, the rate of withholding tax is 15% on both resident and non- resident taxpayers. The rate can be lesser in case a tax treaty applying between Pakistan and the country of residence of the business exists.
Interest and Bank Earnings:
Residents pay 15%. Non-residents are charged 20 percent, provided that the rate is not reduced under a tax treaty.
Royalty and License Fees:
15% for residents. On non-residents, 15 per cent unless a lower treaty rate happens.
Rental Payments:
- Payments on a 10 percent basis to residents, and payments on a 15 percent basis to non-residents.
- Goods and Services: These will be compensated by the following payments.
- Normally 3 percent on goods and 6 percent on services.
Business and Contract Payments:
10% for non‑residents. To residents, rates are between 2% and 15 percent based on the holding period.
Exporters:
Withholding tax on export proceeds at a rate of 1-5 percent. Tax exemptions or tax credits can be offered to exporters.
Non‑Resident Payments:
Withholding tax of 15 percent on payments to non-residents due to services like technical services or royalties except where they are lowered by a treaty.
Tax Relief and Refunds:
Companies that engage in international transactions are able to get reduced rates of withholding taxes as they are given agreements with other nations. These treaties tend to lessen the weight on dividend payments, royalties, interest, and service payments.
Using these rates, Pakistani businesses remain in check, evade penalties and can pay taxes in an efficient manner. Use tax professionals or other legal experts to get it right and to utilize the available tax relief.
Withholding Tax in Pakistan: Key Changes and Updates You Should Know
Pakistan withholding tax applies to individuals and businesses alike in that they deduct tax at the point of income. It assists the government in efficient collection of tax, yet the tax payer should be mindful of the effect of such deductions on total income.
Income-Salary and Employment:
Non-self-employed laborers pay withholding tax as a percentage of the amount of income per slab, often between 0 per cent and 15 per cent. Greater incomes result in greater taxation. The amount deducted may be refunded or changed in case of a larger deduction than the amount due when you file annual tax return.
Dividend Income:
There is a withholding tax of 15 percent on the income earned by residents and non-residents unless a treaty reduces it. This lowers the earnings sent home.
Interest and Bank Earnings:
The withholding tax is 15% Interest on residents and 20% on non-residents. The deduction will amount to less than you get.
Royalty and License Fees:
The tax is charged to both residents and non-residents at 15 percent, thus a certain amount of your income is deducted before you get it.
Rental Income:
Tenants or persons should retain 10 percent in case of residents and 15 percent in case of non-residents. Owners of property lose a part of the rental money during periods of payment.
Business and Contract Payments:
Contractors or professionals are paid at a rate of between 3 and 12 percent. The contractor is given less until the claim of tax credit or return.
Capital Gains:
Disposing property or investments incurs a 10% withholding tax in the case of non-residents. The rates imposed on residents are between 2% and 15% depending on the holding period, lowering the net sale proceeds.
Tax Relief and Refunds:
Should excessive amount of tax be withheld, you can claim back your refund on the filing of your tax form, particularly when you have deductions or exemptions. Proper filing will guarantee that you receive such benefits.
In general, the withholding tax rates in Pakistan have a direct effect on your income, as they make it lower than what you got by different sources. The burden can be reduced by understanding the system and taking advantage of tax credits or exemptions which can result in refunds when filing once per year.
Withholding Tax in Pakistan: Important Changes and Updates That You Need to Know
New changes in the system of withholding tax (WHT) in Pakistan have brought a number of significant adjustments which impact business, individuals, and international dealings. The most significant updates are listed below:
Revised WHT Rates & Structure:
The Federal Board of Revenue (FBR) has revised withholding tax rates on salaries, dividends, contract theory, services and property transfers. Such reforms have an impact on the taxation of individuals and firms.
Filer vs. Non‑Filer Regime:
It has increased WHT rates on non-filers in most categories relative to those on filers, enticing taxpayers to remain on the Active Taxpayers List (ATL).
Service Sector Rates:
Service providers are charged at increased rates of WHT with an exception of an IT and IT enabled services which is charged at a preferential rate of 4%.
Cash Withdrawal Tax:
There is an increased withholding tax on ATM cash withdrawals to non-filers as a push towards tax compliance.
Pay attention to Compliance and Revenue-Generation:
The changes coincide with the general tax reform initiatives within Pakistan, which primarily focus on enhancing compliance, broadening the tax base, and overcoming financial issues to achieve the revenue targets.
It is important to know these updates in order to have correct tax planning and compliance.
Salary Income
0-35: The withholding tax on salary is progressive and depends on the income level. The tax on incomes does not exist on the income less than PKR 600,000, and above the income, various rates are applied, progressing to 35 percent.
Dividend Income
15%: For filers.
30%: For non‑filers.
Interest Income (Profit on Debt)
15%: For filers.
20%: For non‑filers.
Goods, Services and Contracts Payments.
Goods: Filers usually pay 1% to 6 percent and non-filers pay more.
Services: 15 per cent in the case of a filer, and 30 per cent in the case of a non-filer.
Contract Payments: 7.5 percent-8 percent on filers, non-filers more.
Export Proceeds
1%: For general goods.
0.25%: For IT and software services.
Prize Bonds & Winnings
15%: For filers.
30%: For non‑filers.
Prepaid Taxes on Cash Withdrawals.
0.8: On withdrawals more than PKR 50,000 by non-filers.
Non‑Resident Payments
15%: On royalties, technical services, and fees to non-residents.
The aim of these tax rates is to promote compliance and the disparity in rates between filers and non-filers will motivate taxpayers to keep participating in the tax system.
Withholding Tax Rates in Pakistan: A Simple Breakdown for Expats
Expatriates in Pakistan who are living or conducting business in Pakistan need to know the withholding tax system. Withholding tax is paid at the source, i.e. it is taken out of income even before it gets to you. The following is a rough estimate of the essential rates of expats in 2026:
Salary Income
On Residents: The withholding tax will be between zero percent and 35 percent depending on your income. Tax is deducted progressively when you earn more than PKR 600,000 every year.
In the case of Non-residents: Non-residents can have varying tax slabs according to their income brackets.
Dividend Income
15 percent: It is the normal withholding tax imposed on both resident and non-residents receiving dividend income on Pakistani companies.
Interest Income
15%: The tax on interest earned by residents who pay taxes on interest earned, e.g. by bank deposits, is 15%.
20%: The rate is 20 percent in the case of non-residents.
Royalties and Technical Services.
15%: The residents and non-residents who earn their income through royalties, patents, or technical services are taxed at 15%.
Property Rental Income
10%: In case you are renting the property in Pakistan, the rate of withholding tax on rental income is 10 per cent on the income of residents and 15 per cent on non-residents.
Cash Withdrawals
0.8%: Withdrawal of cash by non-residents of over PKR 50,000 in Pakistani banks is subject to withholding tax of 0.8%.
Export Earnings
1%: Expat entrepreneurs dealing with exports enjoy a low withholding tax of 1%.
Non-Resident Contractors and Payments
15%: The withholding tax is 15% on the non-residents who offer services or engage contracts in Pakistan.
These tax rates will affect a number of income sources in Pakistan as an expat. Never forget to keep up with the FBR guidelines because tax treaties can be used to lower these rates further by individuals in countries with treaties with Pakistan.
How to Calculate Withholding Tax in Pakistan: A Step-by-Step Guide
Withholding tax in Pakistan may be calculated easily given these few steps to be observed.
1. Identify the Type of Income
The first consideration is to establish the kind of income you are getting since various incomes are taxed using various rates. Typical sources of income that are liable to withholding tax are:
Salary
Dividends
Interest
Royalties
Rent
Money to contractors and professionals.
2. Check the Withholding Tax Rate
After determining the kind of income, then look up the rate of withholding tax.
Salary: 0 percent to 35 percent progressive on the basis of earnings.
Dividends: 15 percent on residents and non- residents.
Interest: 15 and 20 percent, respectively, on residents and non-residents.
Rent: 10 percent and 15 percent respectively on residents and non-residents.
Contractors/Services: This is generally 7.5% to 12% based on the type of contract.
3. Calculate the Taxable Income
Under both forms of income you must be aware of the amount of taxable income:
In the case of salary, it is your gross salary.
In the case of dividends, this is the overall dividend earned.
Interestingly, it is the aggregate interest.
In the case of rent, it is the amount of rent collected.
In the case of contractors/services, it is the amount that was paid to the contractor or the service provider.
4. Apply the Withholding Tax Rate
After getting the taxable amount, use corresponding withholding tax rate on it. The formula is:
Taxable Income% x Tax Rate = Withholding Tax.
Suppose you are paid PKR 100,000 as salary and your tax rate is supposed to be 10 percent, then you withholding tax would be:
100,000 × 10% = 10,000
Thus PKR 10,000 would be taken off as tax.
5. Check for Exemptions or Tax Credits
An exemption or credit will be available to you depending on what kind of income you earned and whether you are a filer or non-filer. As an example, tax treaties may exempt or allow reduced withholding taxes on income earned on some investments.
6. Deduct and Pay
Once the withholding tax computation is made, the payer (an employer, bank, or business partner) will compute the tax then subtract it out of your income and then pay the rest. They will in turn pay this value to the Federal Board of Revenue (FBR) on your behalf.
7. File Annual Tax Returns
The annual income tax return should be filed at the end of the year to balance the amount of tax already paid (through withholding) to the amount of total tax due based on the total income earned. In case excess tax had been withheld, then you could claim a refund.
Conclusion
The scope of Withholding Tax Rates in Pakistan includes a variety of types of incomes, namely salaries, bank profits, dividends, contractor payments, property transactions, and the import/export business income. Different rates apply according to the type of income, status of filer and the sector with lower rates or exemptions on some industries and registered taxpayers.
To prevent fines, overcharges, and legal issues, it is necessary to comply with FBR regulations. The withholding agents and individual taxpayers also have the responsibility to make sure that they maintain accurate records, submit their statements on time using the IRIS portal, and issue TDCs.
People and corporations are encouraged to pay taxes on a regular basis and become active filers so that their total tax liability is reduced through taking advantage of legal exemptions. A proper grasp and control of WHT rates lessens financial risk, legal compliance, and creates a credible financial image with the FBR. For more insights about Withholding Tax Rates in Pakistan and other tax laws, visit our website Right Tax Advisor.
FAQs Withholding Tax Rates in Pakistan.
Withholding tax (WHT) in Pakistan.
WHT is a tax that is at the source, on income which includes salaries, bank earnings, dividends, contractor payment, and sale of property. The payer pays the tax and remits it to FBR.
Who charges withholding tax deductively?
Withholding agents are employers, banks, companies, contractors and service providers. They would be required to deduct, deposit and report WHT to the FBR.
What is the current WHT rate of filers and non-filers?
Registered filers are also subject to lower WHT rates on majority of transactions. There is a greater rate of non-filers, acting as a compliance boost. The rates depend on the type of income; salaries, dividends, bank profits, property deals.
WHT on salaries and employment income How is WHT applied on employment income and salaries?
Employers pay WHT in monthly installment depending on progressive tax slabs of gross salary. The deduction rates applied to non-filers are higher as compared to those of registered filers.
Does it have exemptions or low rates to certain sectors?
Yes. The IT exports, education, and agriculture enjoy lower WHT rates or are tax-free. Foreign parties can also enjoy relief based on DTAs.
In what ways can the taxpayers claim WHT credits or refunds?
WHT may be adjusted against the annual income tax liability by the taxpayers. Over withholding could be claimed as a refund with the annual filing of tax returns to FBR.
What are the sanctions of failing to comply with WHT?
The failure to deduct, deposit or report WHT within the time frame may lead to penalties, surcharges as well as legal actions by the FBR. Audit complications may also be encountered by the non-compliant withholding agents.