Say No To Extra Taxes

People in Pakistan pay taxes but the majority of them don’t know anything about it. They worry about being taxed differently but they don’t know about the different taxation metrics. Majority of the salaried individuals in Pakistan are unaware of how easily they can save taxes by getting adjustments from their employers and reduce their salary taxes. All employees are entitled to tax adjustments from their employers under the law.

Employers usually deduct income tax from your salary at source and submit it to FBR on your behalf but do not make any tax adjustment of the tax withheld under other heads by various agencies such as banks, telecom companies, educational institutions, airlines, electricity distribution companies, motor vehicle registration authorities, and many others.

It’s a golden opportunity for you as an employee of getting tax adjustments by submitting the relevant tax deduction document as a piece of evidence to your employer and reducing your tax by that amount. But remember to avail these adjustments you need to contact your employer before June so that these adjustments can be done in June payroll before year-end.
Tax deductions made by different agencies under Income Tax Ordinance, 2001 are;

Purchase and transfer of Immovable Property u/s 236K of Income Tax Ordinance, 2001;
When you are purchasing an immovable property, an advance tax is collected at the time of payment. In the case of filer, it is 1% of the property value and in case of non-filer the rate is doubled i.e. 2%. This is an advance tax and is adjustable against your tax liability.

Purchase of International and Domestic Air Ticket u/s 236L and 236B of Income Tax Ordinance, 2001;
When you purchase an international or domestic air ticket, airlines are directed by FBR to collect tax which is adjustable against your tax liability. Rate of tax collection is 5% in case of domestic ticket and Rs. 12,000 and 16,000 in case of international travelling for economy and business class respectively.

Educational Institution Fee u/s 236I of Income Tax Ordinance, 2001;
Educational institutions are directed by FBR to collect tax on the fee paid to them by the students. This tax is paid by the parents of the students, or Guardians and is adjustable against their income tax liability. Such tax is only applicable when fee is exceeding Rs. 200,000 per annum and parent / guardian is a non-filer.

Advance Tax on General and Life Insurance Premium u/s 236U of Income tax Ordinance, 2001;
As per FBR directions, insurance companies are directed to collect advance tax on General and Life insurance premium from a person who is non-filer. This is also adjustable against your income tax liability.
Electricity Bill of Domestic User u/s 235 of Income tax Ordinance, 2001;
Domestic electricity consumers whose monthly bill is Rs. 25,000 and above are required to pay advance tax at a rate of 7.5% which is collected on a monthly basis and can be adjusted against tax liability.

Mobile, Telephone, and Internet bills u/s 236(1)(a) to (e) of Income Tax Ordinance, 2001;
Currently, Advance tax is collected at a rate of 15% from all telecom and internet users by telecom companies and Internet service providers. This advance tax is adjustable against income tax liability.

Motor Vehicle Registration Fee u/s 231B(1) of Income Tax Ordinance, 2001;
Advance tax is charged at the time of Motor Vehicle Registration or transfer of vehicle or sale of the vehicle and is adjustable against income tax liability.

Salaried individuals should contact their employers immediately before processing of payroll for June 2022 so that tax adjustment is made by the employers in a timely manner.