What is the main purpose of withholding tax in Pakistan?
Correct answer: B. To collect tax at the time of payment
- A. To postpone the filing of all returns
- B. To collect tax at the time of payment
- C. To exempt small businesses from taxation
- D. To replace every form of assessment
Explanation
Withholding tax collects tax when specified payments, such as salary, contracts or certain transactions, are made. The amount withheld may later be adjustable or treated as final according to the applicable legal provision.
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About Taxation
Taxation covers the principles used to assess and collect taxes from individuals, businesses and transactions, with emphasis on income tax and sales tax concepts in Pakistan. Questions involve taxable income, exemptions, deductions, tax liability, withholding, returns, assessment, tax avoidance versus evasion, and the distinction between direct and indirect taxes.
Practise Taxation
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