Tax Policies
1 min read
Withholding Tax on Services: Complete Rate Guide 2026
Comprehensive guide to withholding tax rates on various services in Pakistan for the tax year 2026.
IM
Imran Hussain
March 12, 2026
Withholding Tax on Services Overview
Withholding tax on services is deducted at source by the payer and deposited with FBR. This guide covers current rates and procedures for 2026.
Who Must Withhold?
- Federal and Provincial Government
- Public sector organizations
- Companies
- Exporters and importers
- Banks and financial institutions
Current Withholding Tax Rates
| Service Type | Filer Rate | Non-Filer Rate |
|---|---|---|
| Professional Services | 10% | 15% |
| Technical Services | 10% | 15% |
| Advertising Services | 10% | 15% |
| Transport Services | 2% | 4% |
| Commission/Brokerage | 12% | 15% |
| Rent of Machinery | 10% | 15% |
| Contracts | 7.5% | 12% |
Payment and Deposit
- Deposit within 7 days of deduction
- Use PSID (Payment Slip ID) for payment
- File monthly withholding statement
Exemptions
Withholding tax may not apply to:
- Services below Rs. 30,000 per transaction
- Government to government transactions
- Diplomatic missions
- Specifically exempted categories
Documentation Requirements
- Service agreement/contract
- Invoice from service provider
- NTN verification of service provider
- Withholding tax certificate (annual)
Penalties for Non-Compliance
- Failure to deduct: 25% of tax not deducted
- Late deposit: Default surcharge at 12% p.a.
- Late filing of statement: Rs. 2,500 per day
