31/07/2026
FBR has issued instructions to banks regarding the deduction of withholding tax for residents of the erstwhile FATA/PATA areas following the changes introduced through the Finance Act, 2026.
As the tax exemptions previously available to these areas have now been withdrawn, banks are required to deduct withholding tax in accordance with the Income Tax Ordinance, 2001. This includes:
• Profit on Debt – Section 151
• Rent Payments – Section 155
• Salaries – Section 149
All banks have been directed to ensure compliance with these provisions and implement the required changes across their branches.
This is a significant development for taxpayers and businesses operating in the erstwhile FATA/PATA regions, and they should review the tax implications accordingly.