Circular No. 9 of 2011, Islamabad, August 18, 2011

DEDUCTION OF TAX AT SOURCE FROM PAYMENT OF PROFIT ON DEBT UNDER SECTION 151 AND 152 OF THE INCOME TAX ORDINANCE, 2001, AND REPORTING REQUIREMENTS. GOVERNMENT OF PAKISTAN REVENUE DIVISION CENTRAL BOARD OF REVENUE Circular No. 9 of 2011 Islamabad, August 18, 2011 Subject: Deduction of Tax at Source from Payment of Profit on Debt Under Section 151 and 152 of the Income Tax Ordinance, 2001, and Reporting Requirements. Circular No. 9 of 2011, Islamabad, August 18, 2011:- Till now the withholding of tax on profit on debt at the operational level, was being governed by Circular No. 13, of 1991, and various other subsequent instructions handed out in this regard, which had primarily been issued to explain the implementation mechanism of sub-section (2A) of Section 50 of the (repealed) Income Tax Ordinance, 1979. The promulgation of the Income Tax Ordinance, 2001, necessitates issuance of a new set of instructions on the subject. Accordingly, Circular No. 13 of 1991 is hereby rescinded, and the withholding income tax on profit on debt under section 151 and 152 of the Income Tax Ordinance, 2001, henceforth shall be governed as laid down in the succeeding paragraphs. 2. The deduction of tax at source from payment of profit on debt and the allied reporting requirements are governed by Section 151, 152 and 165 of the Income Tax Ordinance, 2001, as well as Rule 43, and 44 of the Income Tax Rules, 2002, and Part VIII of Second Schedule to the Income Tax Rules, 2002. The following instructions are being issued to further clarify the statutory provisions for uniform, standardized, and smooth discharge of respective responsibilities under the law by all the stakeholders:- I. The statutory requirements of the provisions of Section 151 and 152 of the Income Tax Ordinance, 2001, are outlined as under: ________________________________________________________________________ # Person(s) Liable to From Whom Rate of On Deduct Tax To Deduct Withholding [Basis] Tax Tax ________________________________________________________________________ i Person paying yield Resident 10% of the gross Yield (profit on (profit on debt) on recipient of amount of profit debt) on an account, an account,…