ISLAMABAD: Auditor General of Pakistan (AGP) has analysed that the increase in withholding tax collection was mainly attributable to increase in tax rates for the salaried class during 2023-24.
According to the AGP report (2024-25) of Inland Revenue and Customs, tax collection under the withholding tax regime relies on the person making the payment by treating him as a withholding agent. Tax collection under this head is easier due to at-source deduction; therefore, withholding taxes form a major part of the total tax collection.
Tax collection on account of withholding taxes was Rs 2,740.10 billion against the total direct tax collection of Rs 4,530.70 billion for 2023-24.
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In terms of proportion withholding taxes constituted 60.47 percent of the total direct taxes, the report said.
Among the ten major components of withholding tax, withholding taxes on contractual receipts, exports, bank interest and various other items fall under minimum tax or final tax regime.
The Audit observed that collections under these heads were indirect in nature, but the same were being collected/ reported as direct taxes by FBR. Moreover, the collections under the heads of telephone bills and purchases of properties were adjustable; however, these adjustments were not claimed by non-filers.
FBR collected Rs 1,650.75 billion withholding tax under in heads during 2023-24, which was Rs 429.69 billion more than the preceding fiscal year. The increase in withholding tax was mainly attributable to an increase in salary rates, AGP report added.
Copyright Business Recorder, 2025
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