Sales Tax Withholding Agents: The 2026 Eleventh Schedule Changes

Full Article

Withholding obligations start with the applicable schedule entry, not simply the fact that a purchaser is a business. Finance Act 2026 changes two parts of the Eleventh Schedule.

Expanded entry 4

The amendment adds associations of persons and individuals after companies in serial 4. Read the complete entry, including its supplier and transaction conditions, before concluding that a particular purchaser must withhold. This amendment is not permission to deduct an arbitrary percentage from every purchase.

Toll manufacturing

New serial 14 identifies registered persons engaged in toll manufacturing and a person other than a registered person in the corresponding supplier column. The amount specified is four times the tax charged on conversion charges. Do not read this as four times the entire commercial invoice or apply it to every manufacturing contract without matching the entry.

Payment control

Record purchaser category, counterparty registration, contract classification, taxable amount and the precise schedule basis. Keep the deduction and deposit evidence with the invoice. Where a contract mixes supplied material and conversion services, settle its tax treatment before payment.

Federal versus provincial withholding

This guide concerns the federal Sales Tax Act Eleventh Schedule. Provincial sales-tax-on-services withholding rules require their own review; a Punjab registration alone does not determine this federal treatment.

Source and scope

Finance Act 2026, official FBR gazette, PDF pages 28-29. Text reviewed on 14 October 2026. This explains the enacted amendment; a notification-dependent procedure must be checked separately before use.