Withholding Tax (WHT) in Pakistan: Everything You Need to Know
Withholding Tax, or WHT, is often called "Advance Tax" in Pakistan. It is a system where a certain amount of tax is deducted at the source before you even receive your payment. For example, when you withdraw cash from a bank, receive a dividend, or get paid for a contract, the person paying you takes some tax out and sends it directly to the FBR. Our WHT calculator helps you see how much is being deducted from your payments.
Why Does WHT Matter?
The FBR uses Withholding Tax to make sure that even people who don't file their returns are paying some tax. However, the system is designed to favor Filers:
- Reduced Rates for Filers: Registered taxpayers (Filers) usually pay half or even less WHT compared to Non-Filers.
- Adjustable Tax: The money deducted as WHT is not necessarily lost. If you are a Filer, you can adjust this amount against your total annual tax liability when you file your returns.
- Refundable: In some cases, if the WHT deducted is more than your total tax for the year, you can even claim a refund from FBR!
How to Use the WHT Calculator
- Select Category: Choose the type of transaction (e.g., Bank Withdrawal, Dividend, Property Transfer).
- Enter Amount: Type in the gross amount of the transaction.
- Check Filer Status: See the massive difference between being a Filer and a Non-Filer for that specific category.
- Review Net Amount: The tool will show you exactly how much WHT is deducted and how much "Net Cash" you will actually receive.
Common WHT Categories
WHT is applied to many transactions in Pakistan, including electricity bills (above Rs. 25,000 for non-filers), foreign remittances (certain types), prize bonds, and even auction sales. Always ask for a "Withholding Tax Certificate" whenever tax is deducted from your payment; you will need this document when you file your annual tax return to prove you have already paid some tax.