A commission agent's income is subject to the following taxes:
1. Sales Tax on Services (Punjab Revenue Authority - PRA)
Taxability: Services provided by commission agents are taxable in Punjab.
Tax Rate: 16% on the gross commission amount.
Registration: It is mandatory to register with the PRA, regardless of your turnover. You are required to charge this tax on your invoices and file monthly sales tax returns.
2. Income Tax (Federal Board of Revenue - FBR)
Income Category: The net income earned from commissions (after deducting allowable business expenses) is taxed under "Income from Business".
Tax Rates (for Sole Proprietor/AOP for TY 2025): Your net profit will be taxed according to the applicable slab rates for individuals or associations of persons.
Minimum Tax: If your annual turnover is PKR 100 million or more, a minimum tax of 1.25% of your gross turnover is applicable. This is paid if it is higher than your actual tax liability calculated on your net income.
SME Taxation: If your turnover is below PKR 250 million, you may opt for a simplified final tax regime:
0.25% of gross turnover up to PKR 100 million.
0.50% of gross turnover between PKR 100 million and PKR 250 million.
3. Withholding Tax (WHT)
Tax Deducted from Your Commission: The companies or individuals you provide services to will deduct withholding tax from your commission payments at a rate of:
12% if you are an active taxpayer (Filer).
24% if you are not an active taxpayer (Non-filer).
This deducted amount is adjustable against your final income tax liability.
Your Duty as a Withholding Agent: If your turnover exceeded PKR 100 million in the previous year, you are required to deduct tax when making payments for goods, services, rent, or salaries.
4. Professional Tax (Punjab)
An annual professional tax is levied by the Punjab government, payable to the Excise and Taxation Department. The amount varies based on your income or the tax you have paid.