Why is withholding on my fees doubled when I am not on the Active Taxpayers List?

A professional who is not on the Active Taxpayers List (ATL) pays for it at source. Every prescribed person paying your fees is required to apply a rate twice the normal one. The rule comes from section 100BA and the Tenth Schedule of the Income Tax Ordinance, and it switches off once your name is on the list.

What does the law say?

Section 100BA. Section 100BA(1) says the collection or deduction of advance income tax, and the computation of income and tax payable, for a person not appearing on the active taxpayers’ list “shall be determined in accordance with the rules in the Tenth Schedule”. Section 100BA(2) gives the Tenth Schedule effect notwithstanding anything else in the Ordinance.

Tenth Schedule, rule 1. Where tax is to be deducted or collected under any provision of the Ordinance from a person not on the ATL, “the rate of tax required to be deducted or collected, as the case may be, shall be increased by hundred percent of the rate specified in this Ordinance”. Rule 10 lists sections the Schedule does not apply to. Section 153 is not on that list.

The base rate. Section 153(1)(b) requires prescribed persons to deduct tax from payments for services, and section 153(7) says services include those of doctors, dentists, lawyers, accountants, architects and engineers “otherwise than as an employee”. The First Schedule, Part III, Division III, paragraph (2)(ii) sets the tax year 2027 rate at 15% for independent professional services.

Section 181A. Section 181A(1) gives the Board “the power to institute active taxpayers’ list”, and section 181A(2) says it “shall be regulated as may be prescribed”.

How does it work in practice?

Status at time of payment	Rate on fees, tax year 2027
On the ATL	15%
Not on the ATL	15% + 100% of 15% = 30%

The payer checks your status when it pays you. The rule follows the date of payment, so fees paid before your name appears are deducted at 30% and fees paid after at 15%.

Getting on the list. Rule 81B(5) of the Income Tax Rules, 2002 (in the edition held here, amended to 24 November 2023) says a person’s name is included if the person has filed a return for the tax year whose last date for filing fell in the immediately preceding twelve months. Rule 81B(8) adds the name on the next update date after the person meets that test, and rule 81B(4) sets the update as weekly. Later amendments to rule 81B, if any, are not in this corpus.

Worked example (illustrative figures)

Imran is an architect in Peshawar. A construction company pays him a design fee of Rs. 1,000,000 in August 2026, which is in tax year 2027. He did not file the return that was last due, so he is not on the ATL.

1. Normal rate: 15%.
2. Tenth Schedule increase: 100% of 15% = 15%.
3. Rate applied: 15% + 15% = 30%.
4. Tax deducted: Rs. 1,000,000 x 30% = Rs. 300,000.
5. Had he been on the ATL: Rs. 1,000,000 x 15% = Rs. 150,000.
6. Extra deducted because he was not on the list: Rs. 300,000 - Rs. 150,000 = Rs. 150,000.

Imran then files his outstanding return and appears on the list at the next weekly update. A second fee of Rs. 500,000 paid in December 2026 is deducted at 15%: Rs. 75,000.

What happens to the extra tax?

If you file. Rule 4(3) of the Tenth Schedule says that where returns have been filed before a provisional assessment, or within 45 days of receiving one, “the tax deducted or collected under rule 1 shall be adjustable against the tax payable in the return filed for the relevant tax year”. Tax on professional fees is minimum tax under section 153(3). The Ordinance does not say in terms whether the doubled portion is also minimum tax, or only the base 15%. The text is silent on the point, so this page does not resolve it.

If you do not file. Rule 3 directs the Commissioner to make a provisional assessment within sixty days of the due date. Income is imputed from the tax deducted at the higher rate and treated as concealed income. Rule 4(1) makes that provisional assessment final after 45 days unless returns are filed within that time.

What if I was not required to file a return?

Rule 2 of the Tenth Schedule lets the withholding agent notify the Commissioner in writing, before deducting, that a person not on the ATL was not required to file a return. The notice gives the person’s name, CNIC or NTN, the transaction, and the reasons. If the Commissioner does not respond within thirty days, the claim is treated as accepted. Whether a doctor or lawyer registered with a professional body is required to file is a separate question, covered on its own page in this category.

Common mistakes

• Thinking an NTN alone is enough. The rule turns on appearing on the ATL, and rule 81B ties that to filing the return.
• Expecting the payer to refund the extra. The payer deducts at the rate that applied on the payment date. The Tenth Schedule deals with the extra through your return and assessment, not through the payer.
• Assuming the whole extra is refundable. Rule 4(3) makes it adjustable, but the interaction with minimum tax is not spelt out.

What to check in the official text

Read section 100BA, the Tenth Schedule rules 1 to 4 and rule 10, section 181A, and the rate in the First Schedule, Part III, Division III, paragraph (2). Check the current version of rule 81B of the Income Tax Rules, as the edition in this corpus stops at November 2023.