Concept of deduction at source
Importance of deduction at source
Deduction of tax makes collection
of tax easy and saves time for filing return.
Following principles are laid down
for deduction on income tax.
i- Expenditure should be from tax
payer
ii- Expenditure should be in that
particular income year
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| Deduction at source and tax collection |
Cases of deduction at source
Part v chapter x has specified the
following cases where tax shall be deducted.
It is necessary for employer to
deduct the tax from taxable salary of every employee. All resident companies are requiring
deducting the tax while paying dividends to any person. Every person is required to deduct
the tax from the amount paid to non-resident for their resident. Every person is required to deduct
the tax from the amount paid on account of supply of goods and services.
A person is required to deduct the
amount of tax out of the amount of rent if it is paid on behalf of,
i- Government
ii- Local authorities
iii- Company
iv- N G O
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| Table of deduction at source |
It is the tax laws to deduct the income of the tax paye. It is the principal of the income tax ordinance . NAB court has authority to decision the latest cases.
An authorized dealer in foreign
exchange is required to deduct the tax on exports at the time of foreign
exchange. Every person while paying an amount
of prize or prize bound is required to deduct the tax. Every person is required while
selling petroleum products to deduct 10% of tax.
Following are the advantages of
collection of tax by deduction.
i- Chances of evasion of income tax
are minimizes
ii- Lengthy recovery proceedings
are avoided
iii- Speedy collection of tax
iv- In time payment of tax
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