VAT & SD Act 2012
Section 49 - Tax withheld at source and increasing adjustment by withholding entity
(as updated till Finance Ordinance 2025)
1[(1) 2[Notwithstanding the provisions of section 33,] subject to the provisions of sub-section (2), if a supplier makes a supply, which is not exempted or zero-rated, to a withholding entity against agreement, tender, work-order or by any other means, the withholding entity shall withhold at source‚ the determined VAT in the manner prescribed in the rules from the consideration payable to the supplier.]
(2) If a supplier is not registered or enlisted, and if a 3[tax invoice] is not issued, the withholding entity shall not receive any supply from such supplier and shall pay no price against such supply to the supplier 4[:
Provided that, where applicable the supply receiver shall be responsible for payment of applicable VAT if receives supply from unregistered person or person not enlisted.]
5[(3) Withholding entity shall deduct and deposit the VAT in prescribed conditions and method.]
(4) For tax withheld at source and for deposit thereof to the government Treasury, the withholding entity and the supplier shall be jointly and severely liable.
6[(5) If the value added tax payable by a service recipient under a project is collected or deducted at source by the service recipient or, as the case may be, the person paying the service price or commission in the prescribed manner at the time of payment of the service price or commission and deposited with the government treasury, and the person providing the service appoints any subcontractor, agent or other service provider for the purpose of supplying a part of the said total service, then the value added tax shall not be applicable only in respect of the supply of the first subcontractor only, subject to the presentation of documentary evidence of collection or deduction of the applicable value added tax on the same service at the first stage and deposit in the government treasury from the subcontractor, agent or other service provider appointed by the said service provider; and this provision shall not apply in respect of the purchase of goods under the project.]
1 Sub-section (1) of section 49 was substituted by section 75 of the Finance Act, 2019 (Act No. 10 of 2019) with effect from 01 July 2019.
2 The words was Inserted by section 63(a) of the Finance Act, 2020 (Act No. 09 of 2020) with effect from 01 July 2020.
3 The words “combined tax invoice and tax withholding certificate” were substituted by section 63(b) of the Finance Act, 2020 (Act No. 09 of 2020) with effect from 01 July 2020.
4 The symbol “.” was substituted for the symbol “;” and proviso of section 49(2) was inserted by As per section 66(a) of the Finance Act, 2022 (Act No. 13 of 2022) with effect from 01 July 2022.
5 The sub-section (3) of section 49 was substituted by section 47 of the Finance Act, 2021 (Act No. 11 of 2021) with effect from 01 July 2021.
6 Sub-section (5) was substituted by section 8 of the Finance Ordinance, 2025 (Ordinance No. 28 of 2025) with effect from 01 July, 2025.
Disclaimer: This is the authentic English text of The Value Added Tax and Supplementary Duty Act 2012, as published under SRO No. 440-Law/2025/326-Mushak dated 05 November 2025. In the event of any inconsistency or conflict between the content on this website and the official Government publications or gazette notifications relating to laws, rules, regulations or SROs, the official Government publications and notifications shall prevail.