No More Income Tax on Educational Fees Under Section 236I

Previously FBR charged Advance Income Tax @5% on educational / Tuition fees of students. Chargeable to students whose parents or guardians were inactive tax filer in FBR. Moreover this Advance Income Tax previously charged at the time of preparation of fees challans Under Section 236I if fees was more than Rs 200,000 per annum.

Omission of Section 236I of Income Tax Ordinance 2001

Now, Income Tax Ordinance amended and this Section 236I related to tax on Educational Fees omitted from Ordinance.

Educational institutes now not required to charge this 5% Advance Tax at the time of preparation of Challan.

Federal Board of Revenue (FBR) omitted this section through Amendment in Income Tax Ordinance 2001 in Finance Act 2022.

Omitted Section 236I Tax on Educational Fees

We explain Section 236I of Income Tax Ordinance 2001 here for your understanding. Section 236I omitted by the Finance Act, 2022. Extract of omitted section read as follows:
(1) Tax chargeable from a person not appearing on the active taxpayers’ list.
(2) The person preparing fee voucher or challan shall charge advance tax.
(3) Not chargeable if paid by way of scholarship or where annual fee does not exceed two hundred thousand rupees.
(4) The term “fee” includes, tuition fee and all charges received by the educational institution, excluding the amount which is refundable.
(5) Tax collected under this section shall be adjustable against the tax liability.
(6) Advance tax under this section not chargeable from a person who is a nonresident and,—
(i) furnishes copy of passport as an evidence to the educational institution. That during previous tax year, he was nonresident.
(ii) furnishes a certificate that he has no Pakistan-source income; and
(iii) the fee remitted directly from abroad through normal banking channels to the bank account of the educational institution.”