Advance Tax on Foreign Card Payments Section 236Y
Under Section 236Y of the Income Tax Ordinance, 2001, advance tax is collected on amounts paid or remitted abroad through:
- Credit Cards
- Debit Cards
- Prepaid Cards
Time of Collection:
This tax is collected by banks at the time the international transaction is processed.
Applicable Rates
The rate of advance tax depends on the taxpayer’s status:
- Filer: 5% of the amount remitted
- Non-Filer: 10% of the amount remitted
Filer
If a filer makes an international payment of PKR 100,000 using a credit or debit card, the bank will deduct PKR 5,000 as advance tax under Section 236Y.
Non-Filer
If a non-filer makes an international payment of PKR 100,000 using a prepaid, debit, or credit card, the bank will deduct PKR 10,000 as advance tax.
Note: The tax deducted under Section 236Y is not a final tax. It is adjustable and can be claimed as credit while filing the annual income tax return for the relevant tax year.
