Freight forwarders have approached the Federal Board of Revenue to seek clarification on accurate interpretation of section 153 of the Income Tax Ordinance 2001 for deduction of withholding tax on services provided by them including airline and cargo charges.
Sources told Business Recorder here on Thursday that the freight forwarders, working on behalf of resident or non-resident shipping line/air carriers in Pakistan, have asked the FBR to issue clarification on the deduction of withholding tax.
These Freight forwarders are collecting air/shipping cargo charges on behalf of airlines and shipping lines and release the payments to respective airlines and shipping lines. As per the SRO 586(1)1991 clause-xi and also covered by Income Tax Ordinance 2001 Sec 153(1) text (shipping companies and air carriers receiving the payment for the supply of passenger tickets and for the cargo charges of good transported) are exempted to pay withholding tax.
Their is concern that some of local companies are not accepting said SRO and making deduction of withholding tax (6 percent) on gross bill (including the services charges), whereas the withholding tax should apply on services charges not on the Air/shipping Line Charges (as the Airlines/shipping lines charges are Exempted as per subject SRO). Therefore, the FBR should clarify the issue to avoid confusion and proper deduction of withholding tax, sources added.
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