04-12-2007, 05:25 PM
Oh, I forgot to first give my understanding that why tax deduction is not required on reimbursement expenses.
Section 153 of the Income Tax Ordinance, 2001, requires to withhold tax on the following types of payments.
1. Supplies
2. Services
3. Execution of Contracts
As payment of reimbursable expenses do not fall in any of the categories, WHT deduction is not required. But isn't it possible that getting the connection, as in the above case, involves an element of providing services? I mean the contractor is getting the connection for the company (although it would be made available in future) which may create doubt that it is the service provided by the contractor to the Company.
@ Mr. Zurpk
Please don't be confused by my post. You should follow the advice given by Mr. Kamran. What I am trying to clear is very technical in nature.
Section 153 of the Income Tax Ordinance, 2001, requires to withhold tax on the following types of payments.
1. Supplies
2. Services
3. Execution of Contracts
As payment of reimbursable expenses do not fall in any of the categories, WHT deduction is not required. But isn't it possible that getting the connection, as in the above case, involves an element of providing services? I mean the contractor is getting the connection for the company (although it would be made available in future) which may create doubt that it is the service provided by the contractor to the Company.
@ Mr. Zurpk
Please don't be confused by my post. You should follow the advice given by Mr. Kamran. What I am trying to clear is very technical in nature.
