You invoiced a client for Rs 100,000. They paid you Rs 90,000 — and deducted Rs 10,000 as "withholding tax." You never saw that money. It went straight to FBR. Is it gone forever? No. It is an advance payment of your own income tax — and you can claim it back.
The facts, in short
- Withholding tax (WHT): Income tax deducted at source by the person paying you.
- It is not extra tax. It is a credit against your final income tax liability.
- Claim it on your return. Declare the WHT deducted and claim it as a credit.
- Too much deducted? You can claim a refund of the excess.
What withholding tax actually is
WHT is income tax collected in advance. Instead of waiting for you to pay your annual tax, FBR requires certain payers — companies, government departments, large buyers — to deduct tax from your invoice and deposit it directly. You receive the net amount; the tax goes to FBR in your name.
It is not an additional tax on top of your income tax. It is your income tax, paid early. When you file your annual return, you declare the full invoice amount as income and claim the WHT already paid as a credit against your final tax bill.
When WHT applies
WHT applies to specific payments — supplier payments, service fees, contracts, commissions, and more — when the payer falls into a category required to deduct. The rate depends on the type of payment and whether you are on the Active Taxpayer List. Filers pay lower rates; non-filers pay higher rates — another reason to stay on the ATL.
How to claim the credit
- Collect your certificates. Ask each client who deducted tax for a withholding tax certificate showing the amount deducted and deposited.
- Declare gross income. On your return, declare the full invoice amount — Rs 100,000, not the Rs 90,000 you received.
- Claim WHT credit. Enter the total WHT deducted during the year as a tax credit.
- Pay the difference. If your final tax is more than the WHT already paid, pay the balance. If the WHT exceeds your tax, you are due a refund.
When too much was deducted
If the total WHT deducted during the year is more than your final income tax liability, the excess is refundable. You claim it on your return. Refund processing takes time, and incomplete claims are rejected — so get the certificates and the figures right the first time.
What if your client will not give you a certificate?
Ask for it. The withholding certificate is your proof that tax was deducted in your name. Without it, claiming the credit becomes much harder. Bank statements showing net deposits can support your claim, but the certificate is the cleanest evidence.
Don't leave it with FBR. Claim your WHT credit.
We will collect your certificates, prepare your return, and claim every rupee of withholding tax you are entitled to.
Frequently asked questions
What is withholding tax on invoices?
Income tax deducted at source by the person paying you and deposited with FBR on your behalf. It is an advance payment of your own income tax.
Can I claim withholding tax back?
Yes — as a credit against your final income tax liability. If WHT exceeds your tax due, you can claim a refund of the excess.
What do I need to claim WHT credit?
Withholding tax certificates from your clients, bank statements showing net payments, and your filed income tax return.
What if my client does not give me a withholding certificate?
Ask for it. The certificate is your proof of deduction. Without it, claiming the credit becomes much harder.