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Tax rates on education fee for year 2021-2022
Advance tax at the rate of 5 per cent is applicable on a person paying educational fee above Rs200,000 per annum during the year 2021/2022.
The tax is imposed only on those persons who are not on the Active Taxpayers List (ATL).
The tax is adjustable against total tax liability if the person file income tax return within due date or pay surcharge to include the name in the ATL on filing tax return after due date.
The advance tax is deducted under Section 236I of the Income Tax Ordinance, 2001 updated up to June 30, 2021 issued by the Federal Board of Revenue (FBR).
Following is the text of Section 236I of the Income Tax Ordinance, 2001:
236I. Collection of advance tax by educational institutions.— (1) There shall be collected advance tax from a person not appearing on the active taxpayers’ list at the rate specified in Division XVI of Part-IV of the First Schedule on the amount of fee paid to an educational institution.
(2) The person preparing fee voucher or challan shall charge advance tax under sub-section (1) in the manner the fee is charged.
(3) Advance tax under this section shall not be collected from a person on an amount which is paid by way of scholarship or where annual fee does not exceed two hundred thousand rupees.
(4) The term “fee” includes, tuition fee and all charges received by the educational institution, by whatever name called, excluding the amount which is refundable.
(5) Tax collected under this section shall be adjustable against the tax liability of either of the parents or guardian making payment of the fee.
“(6) Advance tax under this section shall not be collected from a person who is a non-resident and,—
(i) furnishes copy of passport as an evidence to the educational institution that during previous tax year, his stay in Pakistan was less than one hundred eighty-three days;
(ii) furnishes a certificate that he has no Pakistan-source income; and
(iii) the fee is remitted directly from abroad through normal banking channels to the bank account of the educational institution.”
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