Is the tax deducted from my professional fees a minimum tax, or can I adjust it or get a refund?

The tax a hospital, company or other prescribed person deducts from your fees is not the end of the matter, and it is not a simple advance either. It sits in between. The Income Tax Ordinance calls it minimum tax, and that label decides whether you pay more, pay nothing further, or can ask for money back.

What does the law say?

Deduction. Section 153(1)(b) requires a prescribed person paying for “the rendering of or providing of services” to deduct tax from the gross amount payable. Section 153(7) says “services” includes “the services of accountants, architects, dentists, doctors, engineers, interior decorators and lawyers, otherwise than as an employee”.

Rate for tax year 2027. The First Schedule, Part III, Division III, paragraph (2)(ii), as substituted by the Finance Act, 2026, sets 15% “in the case of independent professional services such as doctors, lawyers, architects, accountants, software engineers or developers, working independently”. Tax year 2027 covers income from 1 July 2026 to 30 June 2027.

Minimum tax. Section 153(3) says the tax deductible under sub-sections (1) and (2), on the income of a resident person, “shall be minimum tax”. The provisos that follow carve out certain sales of goods and certain contracts by listed companies. None of them covers services. An Explanation then fixes what “income” means here: “the amount on which tax is deductible under sub-section (1) or (2)”.

Credit. Section 168(1)(b) treats the deducted amount as tax paid by you. Section 168(2) gives you a tax credit for it in computing tax due for the tax year of the deduction, and section 4(3)(c) applies section 168 credits after other credits.

Refund. Section 170(1) allows a refund only of tax paid “in excess of the amount which the taxpayer is properly chargeable”.

What does “minimum tax” mean for me?

The Ordinance does not contain one general definition of “minimum tax”. Read together, section 153(3) and its Explanation make the deducted tax the least amount of tax on the fees it was deducted from. In practice that gives two outcomes:

• Normal tax is higher. Your fees are included in the return with your other income. Tax is worked out under section 4 and the First Schedule. The deducted amount is subtracted as a credit, and you pay the balance.
• Normal tax is lower, nil, or you made a loss. The deducted tax stays as your tax on those fees. The part above normal tax is not an overpayment you can reclaim under section 170, because the minimum tax is the amount you are properly chargeable with.

An older version of section 153(3), omitted by the Finance Act, 2020, allowed excess minimum tax on some services to be carried forward for up to five years. That clause no longer appears in the current text, so there is no carry forward in the Ordinance as it now stands.

Worked example (illustrative figures)

Dr. Ayesha is a consultant physician in Lahore. She is not an employee of the private hospital where she sees patients, and the hospital is a company. In tax year 2027 the hospital pays her fees of Rs. 2,400,000 and she is on the Active Taxpayers List.

1. Tax deducted by the hospital: Rs. 2,400,000 x 15% = Rs. 360,000.
2. Minimum tax on those fees under section 153(3): Rs. 360,000.

Case A. Suppose her normal tax on her total taxable income, worked out under the First Schedule, comes to Rs. 500,000 (an assumed figure for this example).

• Credit under section 168: Rs. 360,000.
• Balance payable with the return: Rs. 500,000 - Rs. 360,000 = Rs. 140,000.

Case B. Suppose instead that clinic rent and staff costs leave her with normal tax of Rs. 250,000 (again assumed).

• The minimum tax on the hospital fees is Rs. 360,000, which is higher than Rs. 250,000.
• Her tax on those fees stays at Rs. 360,000. The difference of Rs. 110,000 is not refundable, because it is not tax paid above what section 153(3) makes chargeable.

When can a refund still arise?

Minimum tax limits refunds of the section 153 deduction itself. It does not stop section 170 working for other overpayments. Examples consistent with the text include tax deducted when no deduction was due, such as by a payer who is not a prescribed person, and other adjustable taxes or advance tax paid during the year that go beyond your liability. Section 168(5) says a section 168 credit that cannot be used in the year “shall be refunded to the taxpayer in accordance with section 170”. Section 170(2) requires the application in the prescribed form within three years of the later of the assessment order or the date the tax was paid. Section 170(4) gives the Commissioner sixty days to decide.

What if the fees are declared as nil in the return?

If you file a return declaring no practice income, the deductions shown in the payers’ certificates still exist, and section 168(1)(a) treats each deducted amount as income you derived. Declaring nil does not reverse section 153(3). The deducted tax remains minimum tax on the amount it was deducted from.

Common mistakes

• Calling it final tax. Section 153(3) uses “minimum”, not “final”. Your fees still go into the return, and more tax is due if normal tax is higher.
• Treating it as fully adjustable. Adjustable tax can be refunded if liability turns out lower. Minimum tax cannot, to the extent it covers those fees.
• Relying on the old carry forward. The five year carry forward of excess minimum tax on services was in a clause omitted in 2020.
• Assuming salary deductions work the same way. Section 153 applies to services “otherwise than as an employee”. Tax on a salary is deducted under a different section.

What to check in the official text

Read section 153(3) with its provisos and Explanation, and section 153(7) for the definition of services. Check the rate in the First Schedule, Part III, Division III, paragraph (2), which the Finance Act, 2026 rewrote. Read sections 4(3), 168 and 170 for how credits and refunds are applied. The Ordinance does not spell out a formula for combining minimum tax on some receipts with normal tax on other income, so check your computation against the return form for the year.