Minimum threshold of Tax deduction on payments made under section 153
Minimum threshold of tax deduction on payments made under section 153: Prior to the passage of the Finance Act, 2018 the withholding tax agents i.e. prescribed persons specified in clause (i) of sub-section (7) of section 153 of the Income Tax Ordinance, 2001 were obliged to deduct tax at the rates specified in Division III of Part III of the First Schedule to the Ordinance from payments made in respect of provision/ rendering of services aggregating Rs.10,000/- in a given tax year and from payments made on account of supply of goods aggregating Rs.25,000/- in a given tax year in terms of Circular No. 26 of 1991 (Income Tax) dated 24th August, 1991.
In order to facilitate withholding tax agents the minimum thresholds for deduction of tax under section 153 of the Income Tax Ordinance, 2001 previously given in Circular No. 26 of 1991 (Income Tax) dated 24th August, 1991 have now been enhanced to an aggregate amount of Rs.75,000/- during a financial year in the case of payments being made for supplies of goods by the withholding agent and to an aggregate amount of Rs. 30,000/- during a financial year in the case of payments being made by the withholding agent for the provision/rendering of services.