ISLAMABAD: The federal government has introduced significant changes to withholding tax rates on independent professional services. From the start of the new fiscal year, a 15% withholding tax will be applicable to income earned by doctors, lawyers, architects, accountants, and software engineers or developers working independently.
The Federal Board of Revenue (FBR), in its budget explanatory circular, has outlined the revised withholding tax rates applicable to services and certain debt securities.
According to the FBR, the advance withholding tax rates on the rendering or provision of services have been revised under Division III of Part III of the First Schedule. Under sub-paragraph (i) of paragraph (2), the tax rate has been increased from 6% to 7%.
Meanwhile, an amendment to sub-paragraph (ii) sets the withholding tax rate at 15% for independent professional services provided by doctors, lawyers, architects, accountants, and software engineers or developers working independently.
The government has also introduced revised rates for companies providing terminal and port operating services. A 12% withholding tax will be deducted from the gross amount payable for such services, while a 14% tax will apply to other services that are not specifically covered under paragraph (2) of the relevant division.
The FBR further stated that the withholding tax on capital gains from the disposal of debt securities has also been increased. Under Section 151A and Division IIIAA of Part III, the applicable rate has been raised from 15% to 20%.
The revised withholding tax rates will take effect from July 1, 2026, according to the FBR.
