If you're a freelancer, vendor, or service provider invoicing companies in Pakistan, chances are a chunk of every payment is being withheld before it ever reaches your account. That's Section 153 withholding tax at work — here's exactly how the rates break down and how to get that money credited back at filing time.
What Section 153 Covers
Section 153 requires companies and certain other withholding agents to deduct tax at source when paying for services, supplies of goods, or execution of contracts. It's an advance collection of income tax — adjustable against your final liability, not an extra cost on top of it, provided you claim it correctly in your return.
Section 153 Rates for 2026
| Payment Type | Filer Rate | Non-Filer Rate |
|---|---|---|
| Services rendered to companies | 8% | 14.5% |
| Supply of goods to companies | 4% | 8% |
| Execution of contracts | 7% | 14.5% |
| IT/software exports | 0.25% | — |
Notice the pattern across almost every category — filers pay roughly half of what non-filers pay. That gap alone is usually enough to justify getting on the Active Taxpayer List even before you factor in the annual filing benefit.
Who Actually Deducts It
The paying party — the company or organization receiving your services or goods — is responsible for deducting the tax before releasing payment, and for depositing it with FBR along with a monthly withholding statement. As the recipient, you don't do anything at the point of payment except make sure you get a proper withholding tax certificate for your records.
How to Claim Your WHT Credit
Collect certificates from every party that deducted tax from your payments during the year — clients, contracting companies, banks if relevant. When you file your annual return on IRIS, enter these amounts under Tax Credits. The system nets your total WHT already paid against your computed annual liability; if the WHT collected exceeds what you actually owe, the difference comes back to you as a refund.
Staying on Top of It
- Keep every withholding certificate you receive throughout the year — don't wait until filing season to chase them down
- Cross-check the WHT shown in your IRIS profile against your own records; discrepancies are easier to fix earlier
- Register your NTN and stay on the ATL to unlock the lower filer rates on every future payment
- If you run a business that pays vendors or contractors, remember you're the withholding agent in that relationship and must deposit deducted tax by the 15th of the following month