161Act this week
Failure to withhold or deposit tax
A notice under section 161 says you failed to deduct withholding tax from a payment, or deducted it and did not deposit it, and proposes to recover that amount from you.
Income Tax Ordinance 2001Time you have
As stated on the notice, commonly 15 days.
If you ignore it
The tax that should have been withheld is recovered from you personally, with default surcharge under section 205 and a penalty on top.
Why you got it
Why this arrived
- Payments to suppliers or contractors were made without deducting tax
- Deducted tax was not deposited in the treasury
- Withholding statements do not reconcile with your expense claims
What to do
What to do now
- Obtain proof that the payee declared the income and paid the tax, which relieves you of recovery
- Reconcile every payment against the withholding statement
- Where deduction was genuinely not required, cite the exemption in writing
Documents
What to gather
- The notice and the schedule of payments it lists
- Withholding statements filed for the period
- Payment challans (CPRs)
- Exemption certificates held by the payees
Send us the notice before the deadline
Photograph every page and send it on WhatsApp. We read it the same day and tell you the real exposure, not the worst case. Our principal is a licensed Income Tax Practitioner and can be authorised on your IRIS account to reply and appear for you.
0335 1358871 · Monday to Saturday, 11:00 am to 7:00 pm (PKT)