Download – Public Ruling – PR/IT/2018/02 (10/05/2019)
Department of Inland Revenue has published public ruling on deducting of Withholding Tax from the service provided by individuals.
- If the monthly payment exceeds Rs. 50,000/-, WHT should be deducted on the total amount
- Similar services and similar services or connected work – Include only services which are similar and connected to the prescribed in the Gazette.
Subparagraphs (i) and (ii) of the Gazette No. 2064/51;
“any service provided in the capacity of independent service providers such as doctors, engineers, accountants, lawyers, software developers, researchers, academics, or any other similar service;”
“any service of construction work, security service, janitorial service, consultation work of any kind, organizing of events, catering, designers, dressmakers, tour guidance, entertainment, agency functions or any similar services or connected work where such services are provided under an agreement or otherwise;”
- Transport services are not subject to WHT
- Transport services or renting of vehicles depend on the circumstances of whether the ability to control the utilization of the vehicle remains in the possession of the owner.
| Facts | Controlling Power | WHT Liability |
|---|---|---|
| Driver and/or fuel is provided by the vehicle owner And Vehicle remains in the possession of the owner | It is concluded; The ability to control the vehicle remains in the possession of the owner | Can be considered as Transport service and hence not subject to WHT |
| Driver and/or fuel is provided by the vehicle owner And Vehicle remains in the possession of the user for a certain time period | It is concluded; The ability to control the vehicle remains in the possession of the user | Can be considered as renting and hence it is subject to WHT |
| Driver and/or fuel is provided by the vehicle owner And User has colored/painted the vehicle with his trade name | It is concluded; The ability to control the vehicle remains in the possession of the user | Can be considered as renting and hence it is subject to WHT |
- Supply of any article on contract basis through tender or quotation is subject to WHT considering as supply of service.
- Deduction of WHT on construction works
Construction works and services which are connected with the construction work are also subject to WHT
– Pilling
– Supply of labourers
– Supply of construction materials
In the case of materials are provided by the building owner
Only relevant value of construction service (excluding values of materials) is subject to WHT
In the case of materials are provided by the contractor himself;
Total contract value (including values of materials) is subject to WHT
- Vocational services provided as an independent service provider – this includes the services provided through applying his knowledge, talent and/or experiences. (Eg. Carpenter work, Outgrowers)
