The National Board of Revenue (NBR) has instructed various government and private institutions to deduct withholding tax on applicable payments and deposit the deducted amounts into the government treasury.

In an order issued on Wednesday, the NBR designated government offices, statutory authorities, local authorities, autonomous and semi-autonomous organisations, educational institutions and other specified entities as “specified persons” under the Income Tax Act, 2023.

Under Section 140(3), read with Section 342 of the Income Tax Act, 2023, these institutions will have to deduct tax at source at the prescribed rates when making certain payments to individuals or organisations.

The deducted tax must be deposited into the government treasury within the stipulated timeframe. The institutions will also be required to maintain the necessary accounts and records in accordance with relevant rules.

The NBR expects the move to expand the scope of withholding tax collection across both public and private institutions, helping increase income tax revenue and curb tax evasion.