Pakistan’s tax framework emphasizes both revenue generation and documentation of high-value personal expenses. To ensure fair taxation from individuals employing foreign domestic help, Section 231C of the Income Tax Ordinance, 2001 imposes an advance tax of PKR 200,000 at the time of issuing or renewing a visa for foreign domestic workers.
This provision targets sponsors, households, and agencies employing foreign nationals for domestic services, ensuring they contribute proportionately to the tax net.
Legal Text Section 231C: Advance Tax on Foreign Domestic Workers
“Any authority issuing or renewing domestic aide visa to any foreign national as a domestic worker at the time of issuing or renewing such visa shall collect from the agency, sponsor or the person employing such foreign national a tax of two hundred thousand rupees.
The tax collected or collectible under this section shall be adjustable advance tax for the tax year to which it relates on the income of such agency, sponsor or person employing the services of such foreign national.”
1. Purpose and Intent of Section 231C
The main objective of this section is to:
Broaden the tax base by documenting luxury expenditures;
Ensure high-income individuals and employers of foreign staff contribute to advance tax;
Generate upfront tax revenue through controlled visa issuance;
Encourage transparency in employment of foreign domestic aides.
This provision essentially links tax compliance with immigration and visa processes.
2. Who is Liable to Pay Tax?
The tax is collected from:
The agency arranging the foreign domestic worker;
The sponsor (individual or company) applying for the visa; or
The employer personally engaging the services of the foreign worker.
In all cases, liability lies with the Pakistani party employing or sponsoring the foreign national.
3. Amount of Tax Payable
Under Section 231C(1), a fixed amount of PKR 200,000 must be paid per visa issued or renewed for a foreign domestic worker.
This payment is made each time a visa is issued or renewed.
4. Point of Collection
The authority issuing or renewing the visa (such as the Ministry of Interior, FIA, or authorized visa section) is responsible for collecting this tax at the time of visa issuance or renewal.
This ensures automatic compliance before the foreign worker is legally permitted to work.
5. Nature of Tax — Adjustable or Final
The tax collected is adjustable against the income of the employer, agency, or sponsor in the same tax year.
This means it is not a final tax, and the amount can later be adjusted when computing total income tax liability under the Ordinance.
6. Example for Illustration
Mr. Ahmad, a Karachi-based businessman, sponsors a domestic worker from abroad in 2024.
Visa issuance triggers PKR 200,000 advance tax under Section 231C.
During filing of his income tax return for Tax Year 2025, this PKR 200,000 is adjusted against his overall income tax liability.
If his total tax liability exceeds PKR 200,000, the balance remains payable. If it is lower, the excess can be treated as advance tax adjustment but not refundable beyond the year.
7. Key Compliance Responsibilities
To ensure compliance with Section 231C, the employer or sponsor should:
Deposit PKR 200,000 at the time of visa issuance or renewal;
Obtain tax payment receipts from the visa-issuing authority;
Declare the payment in their annual income tax return as adjustable advance tax;
Retain documentation for audit or verification by FBR.
8. Implications for Non-Compliance
Failure to pay the required tax may result in:
Visa processing delays or rejection;
Penalties under Section 182 for non-payment of tax;
Legal recovery by FBR under Section 137 or 162;
Disqualification for future sponsorships or renewals.
Thus, timely compliance not only avoids penalties but also ensures seamless immigration processing.
9. Broader Policy Context
This section represents FBR’s effort to tax luxury-linked expenditures — similar to taxes on vehicles, property transactions, and international travel.
Employing foreign domestic workers is seen as a sign of high net worth, and this tax serves as a progressive revenue measure targeting affluent segments of society.
10. Adjustability and Tax Credit
The tax under Section 231C is adjustable advance tax, meaning it can be claimed as a tax credit in the same year’s return.
However, it cannot be carried forward if unadjusted.
Section 231C ensures fair taxation on luxury employment practices, promotes income documentation, and supports revenue efficiency through a prepayment mechanism at the visa stage.
It also helps integrate immigration authorities with the FBR tax system, ensuring high-income taxpayers are easily traceable through their foreign employment expenditures.
At Tanweer Habib & Co., we assist clients in advance tax compliance, tax credit adjustment, and record maintenance to ensure smooth FBR reporting and audit protection under Section 231C.
FAQs on Section 231C Advance Tax on Foreign Domestic Workers
1. What is Section 231C about?
It mandates payment of PKR 200,000 advance tax when issuing or renewing a visa for a foreign domestic worker.
2. Who pays this tax?
The employer, agency, or sponsor employing the foreign domestic worker.
3. When is the tax payable?
At the time of visa issuance or renewal.
4. Who collects the tax?
The authority issuing or renewing the visa — such as the Ministry of Interior or other authorized body.
5. How much tax is payable per visa?
A fixed amount of PKR 200,000 per domestic worker.
6. Is this tax final or adjustable?
It is adjustable against the taxpayer’s annual income tax liability.
7. Can the tax be claimed as a credit?
Yes, it can be adjusted in the income tax return for the same tax year.
8. What happens if the visa is not issued after payment?
If the visa is denied, the tax can be adjusted or claimed back upon verification with FBR and the issuing authority.
9. Can this tax be carried forward to the next year?
No, it cannot be carried forward or refunded beyond the relevant tax year.
10. Does this apply to Pakistani domestic workers?
No, it applies only to foreign nationals employed as domestic aides.
11. What is the purpose of this section?
To document high-income taxpayers employing foreign staff and generate advance tax revenue.
12. Does it apply to multiple workers?
Yes, the PKR 200,000 tax applies per worker.
13. Is the tax applicable for visa renewals?
Yes, it applies at every issuance and renewal of the visa.
14. What is the nature of this tax under FBR rules?
It is an advance tax, not a withholding or final tax.
15. Can companies also be liable under this section?
Yes, if a company sponsors or employs a foreign domestic worker, it must pay the tax.
16. Is there any exemption available?
No general exemption is prescribed; all sponsors or employers are liable.
17. What if the foreign worker is employed by a diplomat?
Diplomatic missions are typically exempt under international conventions, subject to government rules.
18. How is this tax shown in the income tax return?
It is recorded under Adjustable Advance Tax in the taxpayer’s IRIS profile for the relevant year.
19. What are the penalties for not paying?
Non-payment may result in visa rejection and FBR recovery with penalty under Section 182.
20. How can Tanweer Habib & Co. assist?
We help clients calculate, deposit, and adjust the advance tax under Section 231C, and maintain proper documentation for audit and compliance.
