FBR Introduces New Penalty Regime for Withholding Agents

Tax withholding agents in Pakistan will be penalised if they fail to collect or deduct withholding taxes from July 1, 2022. The Federal Board of Revenue (FBR) has introduced a new penalty regime for those who fail to comply with the new rules and regulations.

The new regime would be applicable on government departments, engineering departments, registrar of properties, registering, recording or attesting transfer of any immovable property, motor vehicles registration authorities, the Accountant General Pakistan Revenues (AGPR) and private sector companies, and other categories of withholding agents.

The Federal Board of Revenue (FBR) has established a new Directorate-General for Synchronized Withholding Agents System to document withholding transactions in future. The system has yet to become fully operational, but necessary staff has been appointed at the FBR Headquarters.
The Commissioner may notify any person or class of persons required to deduct or collect tax under this Ordinance to integrate with Synchronized Withholding Administration and Payment System.
Any notified SWAPS agent shall not be eligible for tax credit under Part X of Chapter III of the Ordinance. The same number and copy of SWAPS Payment Receipt (SPR) shall replace the copy or number of Computerized Payments Receipts (CPR) for the purposes of this section.
Any person who fails to integrate or perform roles and functions as specified, after being duly notified by the Board as SWAPS Agent, shall pay a penalty of Rs.50,000 for first default of 07 days and Rs.100,00 for second default of next 07 days.