The withholding tax provisions shall not apply in case of Free Tax Number (FTN) holders, says a clarification issued by a Regional Tax Office, Federal Board of Revenue (FBR). Sources told Business Recorder here on Friday that the Regional Tax Office-III Karachi had informed a unit that the persons having Free Tax Numbers (FTNs) are not required to obtain exemption certificate for "NIL" withholding from payments received under various heads as per the provisions of Income Tax Ordinance, 2001.
In this regard, the RTO-III Karachi had issued a clarification regarding non-deduction of withholding taxes for holder of FTN. As per RTO, in view of provisions of section 49(3) of the Income Tax Ordinance, 2001, "Any payment received by the Federal Government, a Provincial Government or a Local Government shall not be liable to any collection or deduction of advance tax". Therefore, it is hereby clarified that person(s) having Free Tax Numbers are not required to obtain exemption certificate for "NIL" withholding from payments received under various heads as per the provisions of Income Tax Ordinance, 2001.
Therefore, the institution as such will not be required to obtain exemption. However, its employees as individuals shall continue to be governed under section 114 read with section 116 of the Income Tax Ordinance, 2001 and other relevant provisions of Income Tax Ordinance, 2001. The clarification was issued on the specific request of the applicant as per applicable laws of the Income Tax Ordinance, 2001, the RTO added.
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