Payment of Royalty to resident persons Section 153B
Payment of royalty to resident persons [Section 153B & Division IIIB of Part Ill of the First Schedule]
Payment of royalty to resident persons Section 153B: Income from royalty is chargeable to tax under the head, “Income from other sources”. However, in case of non-residents receiving Pakistan source royalty tax is separately imposed at the rate specified in Division IV of Part 1 of the First Schedule which is 15% of the gross amount of royalty.
In the case of resident persons, income from royalty is made part of taxable income and taxed at the rates provided in Division I or 11 of Part I of the First Schedule.
Prior to the Finance Act, 2019, there was no withholding tax on payment of royalty to resident persons. A new section 153B has been introduced through the Finance Act, 2019 which requires every person paying royalty to a resident person to deduct tax at the rate of 15% of the gross amount payable.
The tax deductible shall be adjustable against the income of the recipient of royalty.