Section 149 of Pakistan's Income Tax Ordinance 2001 — employer's obligation to deduct income tax at source on salaries.
Section 149 of Pakistan's Income Tax Ordinance 2001 requires every employer to deduct income tax from employee salaries each month and deposit it with the FBR. The deduction is calculated on the employee's estimated annual salary using the progressive slab rates notified in each year's Finance Act, then apportioned equally across 12 months.
The section uses an average-rate methodology: the employer estimates the employee's annual taxable salary, computes total annual tax per the slabs, divides by 12, and deducts that amount monthly. When circumstances change (mid-year salary increase, bonus, new tax credits), the employer recalculates the remaining monthly liability using year-to-date adjustments.
Employers must file monthly Rule 44 statements showing tax deducted, submit annual Section 165 statements, and issue Form 149 certificates to each employee for their annual tax return. Failure to deduct or deposit Section 149 tax carries penalties of 10% of the unpaid amount plus default surcharge. Modern payroll software like Peoplifi automates all these calculations and filings.
Under Section 149, our payroll deducts PKR 45,000 monthly income tax from Ahmed's salary and deposits it with the FBR on the 15th.
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