Payment of Car Rental

[ArsalanYousuf]

I need to confirm whether tax shall be deducted on payment of rent a car service at 6% or 2%..?

Or any clarification is provided by FBR for this purpose

Regards

[ArsalanYousuf]

Reminder?

[Muhamamd Umar Farooq]

Dear Arslan,

According to mine, as we are deducting 2 Percent on Transportation Freight, so may be 2% charge on the rental income.

Kind Regards,

MUHAMMAD UMAR FAROOQ

[LapTop]

2%

[Jay]

Rent a car does not fall under transport service, and hence higher rate will apply.

[awaisaftab]

2% it is clearly mentioned in Income Tax Ordinance , 2001.

[Jay]

RE: Tax on Rent A Car
Renting of Vehicles-Provisions of Section 50(4) are applicable;
following is the text of CBR's letter C.No 1(17)WHT/91 dated November 18,1992;-

"I am directed to refer to your letter dated 5-10-1992 on the subject and to say that renting of vehicles amounts to provision of services to which provisions of section 50(4) of the Income Tax Ordinance, 1979 are applicable. The payments for services are subject to deduction of tax @ 5%".

Rent a car is a service which doesn't fall under transport services, hence the higher rate of services will be applied. Company 8% and Others 10%