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+--- Thread: Income Tax VS. Withholding Tax (/showthread.php?tid=10503)
Income Tax VS. Withholding Tax - ali.amjad.pk - 10-19-2011
AoA,
I want to know the difference between income tax and withholding tax. If any one can demonstrate with a good example it would be kind enough ).
Also critically examine this statement
If Income Tax Exemption Certificate is not provided then 3.5% of the value would be deducted as Income Tax.
I am confused now because 3.5% is the rate of withholding tax and income tax is on taxable income.
please share your experience and clear my concept.
Best Regards,
ALI AMJAD
- Muhamamd Umar Farooq - 10-19-2011
Dear,
Hope the below mentioned detail will clear your understanding regarding aforesaid subject.
I like to think of income as the amount of money someone receives on a regular basis, while wealth is the length of time that person (or family) could maintain their current lifestyle without receiving compensation for performing additional work.
3.5% Tax deduction.
If the person provide you the exemption certificate you can not deduct the amount from his invoice, if he is not providing to you then you will have to deduct his amount from his stated amount on invoice.
for Example.
whenever our transporter submit bill of transportation we deduct their 2% amount from their bill.
Kind Regards,
Muhammad Umar Farooq
- Muhamamd Umar Farooq - 10-19-2011
Dear Bro,
Please discard my Post 1ST Portion.
Kind Regards,
Muhammad Umar Farooq
- sahibzada - 10-20-2011
Income tax is the tax paid by a person on the taxable income derived durning the year .
Withholding tax is also income tax collected by withholding agents on behalf of the government and then deposited in the government treasury the basic aim behind such collection is to encounter with day 2 day cash flow problem faced by government .These taxes depending upon nature can be advance or final tax.
As far as the statement is concern withholding agents are required to collect income tax @ 3.5 on supplies made by a supplier unless an exemption certificate issued by the commissioner income tax is produced .
- ali.amjad.pk - 10-20-2011
thanks sahibzada and muhammad umar farooq )
- Muhamamd Umar Farooq - 10-20-2011
Dear Brother,
Does'n matter,it is my pleasure to spread knowledge.
Kind Regards,
Muhammad Umar Farooq
- sharif lakhani - 10-20-2011
income tax is tax on income. withholding tax is is a method by which government gets revenues from the person who may not like to pay tax so it is deducted at source. some withholding tax may be adjustable if the person is already tax payer. some withholding tax are final liability settled
- Muhamamd Umar Farooq - 10-21-2011
Dear Sharif,
Excellent Defined, Dear Lakhani, what do you do? can we make personal liaison each other for taxation knowledge.
Kind Regards,
Muhammad Umar Farooq