Quarterly compliance · Section 165
Withholding Tax Statements & Advisory — Filed Right, Every Quarter
Every deduction your business makes creates a reporting obligation four times a year — statements due April 20, July 20, October 20, January 20, accurate to the rupee and reconciled against your challans. We run the whole cycle, plus advise on getting the rates right at source.
Obligation
s.165 · prescribed persons
Cadence
Quarterly · 20th after quarter-end
Includes nil
Zero-deduction periods still file
Revision window
60 days post-filing
How this is verified
Rates quoted below reflect the Finance Act 2026 regime effective July 1, 2026 (tax year 2027). Withholding rules change annually and through SROs mid-year — every engagement starts from FBR's current official rate card, not from memory or last year's tables.
The obligation, plainly stated
If your business pays salaries, contractor fees, rent, service providers, suppliers, or virtually any significant business expense, you are probably a withholding agent: you deduct tax at source, deposit it against FBR's head of account, and then report each deduction in a quarterly statement under Section 165. The statement is what closes the loop — without it, deductions exist as cash movements but not as creditable records for your payees.
Three facts trip up new withholding agents constantly. First, the statement is mandatory even when nothing was withheld — a nil quarter still files by the deadline. Second, deadlines are fixed at the 20th of the month following each quarter, not tied to your convenience or fiscal calendar. Third, statements must reconcile against your actual PSID challans; mismatches surface later as audit queries or blocked credits for your vendors.
Key withholding positions we apply (filer rates, Finance Act 2026)
| Payment type | Filer rate | Non-filer treatment |
|---|---|---|
| Goods supplied (s.153) — company | 5% | Generally doubled |
| Goods supplied (s.153) — other than company | 5.5% | Generally doubled |
| Services — specified sectors | 7% | Doubled |
| IT & IT-enabled services | 4% | Doubled |
| Independent professionals | 15% | Doubled |
| Other services | 14% | Doubled |
| Contracts (s.153) | 7.5% | 8% applies broadly; verify current schedule |
| Salary (monthly slabs) | Progressive, 0% up to Rs 600k/year | Separate non-filer slab table |
| Dividend (s.150) | 15% | 30% |
| Profit on debt (s.151) | 15% | 30% |
| Telephone/internet bills > Rs 1,000 (s.236) | 10% | 15% |
Salary withholding — the table everyone asks about
Employers deduct monthly salary tax using annual progressive slabs. Under the Finance Act 2026 (tax year 2027), the annual slabs for salaried individuals are:
| Annual taxable salary | Rate |
|---|---|
| Up to Rs 600,000 | 0% |
| Rs 600,001 – 1,200,000 | 1% of amount exceeding Rs 600,000 |
| Rs 1,200,001 – 2,200,000 | Rs 6,000 + 11% of excess over Rs 1,200,000 |
| Rs 2,200,001 – 3,200,000 | Rs 116,000 + 20% of excess over Rs 2,200,000 |
| Rs 3,200,001 – 4,100,000 | Rs 316,000 + 25% of excess over Rs 3,200,000 |
| Rs 4,100,001 – 5,600,000 | Rs 541,000 + 29% of excess over Rs 4,100,000 |
| Rs 5,600,001 – 7,000,000 | Rs 976,000 + 32% of excess over Rs 5,600,000 |
| Above Rs 7,000,000 | Rs 1,424,000 + 35% of excess over Rs 7,000,000 |
Employees can preview their exact monthly deduction anytime with our salary tax calculator — useful sanity-checking your payroll before the quarterly statement locks the numbers in. The complete official schedule lives in FBR's published withholding tax rate card.
Advisory side: where withholding goes wrong in real businesses
Wrong rate applied at source
Paying a freelancer at the goods rate instead of the IT-services rate, or missing sector-specific carve-outs entirely — small percentage errors compound across hundreds of invoices.
Vendor status ignored
Paying non-filer vendors at filer rates because nobody checked the ATL. We screen active vendors each quarter so deductions match reality.
Challan–statement drift
Deposits made under wrong heads or years leave statements unreconciled. Our cycle ties every line to its PSID before filing, not after a query arrives.
Missed revision windows
Errors discovered after filing sit uncorrected until they become audit findings. The 60-day revision route exists precisely for this — we use it proactively.
Want to understand how withholding interacts with your own final liability? Start with our explainer on how federal income tax withholding works in Pakistan.
Our quarterly cycle
- 1
Agent profile setup
We map your payment streams to the correct withholding provisions once — salaries, contracts, services, rent — so every subsequent quarter runs off a correct template.
- 2
Data collection per quarter
Payroll registers, vendor payments, and challan copies pulled through a standing checklist timed ahead of each 20th deadline.
- 3
Reconciliation & preparation
Every deducted rupee traced to a deposited challan; every statement line matched to payee NTN/CNIC. Discrepancies resolved before filing, flagged honestly if unresolvable.
- 4
E-filing by the 20th
Statements filed on IRIS including mandatory nil quarters, acknowledgments archived, and a quarterly summary sent showing what was reported.
- 5
Advisory follow-through
Rate changes announced mid-year get applied prospectively; vendors whose ATL status changed get flagged before the next payment run.
What we need each quarter
Core
- Payroll register with employee CNIC/NTN and tax deducted
- Vendor/service payment register with payer classifications
- Copies of all withholding PSID challans for the quarter
- Prior-quarter filed statement acknowledgment (we retain)
Where applicable
- Rent agreements and tenant payment schedules
- Dividend/distribution records (companies)
- Import payment documents
- List of newly onboarded vendors during the period
Engagement model
Quarterly statement filing is priced per quarter based on transaction volume — a flat quote issued before each cycle begins, covering preparation, reconciliation, e-filing, and archive maintenance.
Advisory work — rate determinations, vendor screening setups, remediation of past lapses — is scoped separately and quoted only after reviewing the actual situation, because honest scoping requires seeing the data.
Remediation cases (missed quarters, undeposited withholdings) follow a disclosure-first approach: we quantify exposure precisely, then correct filings and deposits in the order that minimizes escalating penalties.
Official references
Related services
Withholding touches both sides of every payment.
Frequently asked questions
Who must file quarterly withholding tax statements?
Prescribed persons — essentially businesses that withhold tax when making payments such as salaries, contracts, rent, or services — must file quarterly statements under Section 165 of the Income Tax Ordinance, even when no tax was withheld during the period.
When are quarterly withholding statements due?
Statements for quarters ending March 31, June 30, September 30, and December 31 are due by April 20, July 20, October 20, and January 20 respectively.
What happens if we don't file withholding statements?
Non-filing attracts penalties under Section 182 that escalate with delay, and for registered persons it can contribute to inactivation of their sales tax registration. Persistent default also surfaces during audits as an easy first finding.
Can a withholding statement be revised after filing?
Yes — a revised statement can be filed within sixty days of the original, correcting errors before they harden into mismatches against payees' own returns.
We withheld tax but never deposited it. What now?
Undeposited withheld amounts remain recoverable with penalties regardless of statement status, so this needs immediate correction: deposit the arrears, then reconcile the statement to the late challans. We handle these remediation cases routinely.
Done-for-you service
Next quarterly deadline won't wait
Message us with your business basics — number of employees, rough monthly vendor spend — and we'll quote the full year's statement cycle flat within a day.