Section 205: default surcharge when tax is not withheld or paid
By CheckOne by FormOne · Updated 21 Oct 2026
Section 205 of the Income Tax Ordinance, 2001 charges default surcharge on tax that is not paid on time. It also applies to a withholding agent who does not deduct or collect tax as required, or does not pay over tax that was deducted.
How it works, in outline
- It is charged on the unpaid or short-withheld tax, in addition to that tax.
- It runs for the period of default, so it grows the longer a shortfall stays unpaid.
- The rate and the method are set in the law and have changed over time. Check the current text on FBR’s website or ask your tax adviser.
Where ATL status comes in
When a payee is not on the Active Taxpayer List, a higher withholding rate generally applies. Withholding at the lower rate leaves a shortfall. Under section 161 the payer can be asked for that shortfall, and default surcharge under section 205 can be added to it.
Why the date matters
The question is the payee’s status when you paid, not today. FBR replaces its ATL files and keeps no history, so a lookup made later cannot show what the list said on an earlier date. Keep a dated record made on or before each payment.
How CheckOne helps
CheckOne keeps every weekly check with the FBR file’s date and SHA-256, and tells you on Monday when a vendor drops off a list, so the rate can be reviewed before the next payment. It does not compute surcharge, and it is not tax advice.
Official sources and scope
- FBR: daily ATL updates and the revised annual transition (S.R.O. 1638(I)/2024)
- FBR income-tax and sales-tax ATL downloads
- FBR withholding tax rate cards by tax year
- FBR Sales Tax Act publications
- FBR Income Tax Ordinance publications
General information, not tax advice. Verify the rules and source dates applicable to your transaction with your advisor. This guide does not publish an independently approved rate table.