When the Law Says “Do Not Deduct”: Is a Section 159 Exemption Certificate Still Required?

Mettis Global says a certificate under Section 159 of Pakistan’s Income Tax Ordinance may not be necessary when a Part IV clause independently excludes a payment from withholding tax. The article distinguishes this from claims involving income-tax exemption, reduced rates or tax credits, where Section 159 may apply.

It reviews differing High Court rulings, including a Sindh High Court case involving Fauji Fertilizer Company Limited Employees Gratuity Fund, and says the unresolved issue is whether taxable income can qualify for a standalone Part IV withholding exclusion without a certificate. The article argues that each clause’s wording and conditions should be assessed, with transaction-specific evidence retained; it also notes that withholding agents in Sindh may remain cautious pending clarification by FBR or an authoritative ruling.