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Advance Tax on payment of Fee

GOVERNMENT OF PAKISTAN

REVENUE DIVISION

FEDERAL BOARD OF REVENUE

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C.No.4 (36) ITP/2013

Islamabad, the 19 July, 2013



Circular No.6 of 2013

Income Tax



Subject: FINANCE ACT,2013 - EXPLAINATION REGARDING IMPORTANT AMENDMENTS MADE IN THE INCOME TAX ORDINANCE,2001.

Salient features of the amendments made in the Income Tax Ordinance, 2001 through Finance Act, 2013 are explained as under:-

Advnace tax on payment of fee to Educational Institutions [Section236I]

Please Note: Since 2013-14, as per newly inserted section 236I every educational institution is required to collect advance income tax at the rate of 5% on the amount of fee paid to an educational institution.

38. Advanced tax on payment of fee to Educational Institutions [Section 236I]

As per newly inserted section 236I every educational institution is required to cllect advance income tax at the rate of 5% on the amount of fee paid to an educational institution.The person responsible for preparing monthly, bimonthly or quartelty fee voucher or challan shall also charge withholding tax in case the fee exceeds two hundred rupees annually.

The term fee include tuton fee and all charges received by the educational institution, by whatever name called, excluding the amount which is refundable. The tax collected in this section is adustable. The withholding agent for the purposes of this section i.e educational institution shall also provide details in the withholding statement to be filed under 165 to the income Tax Ordinance, 2001.


NOTE: This 5% advance tax is not applicable in case:

  1. -Annual fee is Rs. 200,000 and below.
  2. -Parents/guardian (making the payment) are non-resident and stay in Pakistan was less than 183 days in the immediately preceding fiscal year, to be determined on the basis of entry and exit stamps as per the Passport.
  3. -Fees are remitted directly from abroad to the University bank account [in case of (2) above.

This may also be noted that claim for waiver of Advance Tax will only be considered before the due date of tuition fee submission.