Persons not appearing on Active Taxpayers List (ATL) are liable to pay advance income tax at the time of paying educational fee.
Officials at Federal Board of Revenue (FBR) said that through Finance Act, 2020 the condition of paying advance tax under Section 236I of Income Tax Ordinance, 2001 on educational fee had been abolished for persons appearing on ATL.
However, those persons not appearing on ATL shall remain required to pay advance income tax on payment of educational fee.
Similarly, the educational institutions are required to provide details of those persons who are not ATL and making fee above Rs200,000 per annum.
The rate of collection of tax under section 236I shall be 5 percent of the amount of fee for persons not appearing on ATL.
The collection of advance income tax on payment of educational fee was introduced through Finance Act, 2013. The purpose of introducing the advance tax on such transaction was to bring those people into tax net who have taxable income but not paying their tax liability.
The FBR officials said that after changes brought through Finance Act 2020, only those persons who are not on the ATL shall pay advance income tax.
However, this tax shall be adjustable against income tax liability in case that person files his income tax return and ensure his name on the ATL.