Income Tax Ordinance, 2001 — Section 166: Priority of tax collected or deducted

166. Priority of tax collected or deducted. — (1) Tax collected by a person under Division II 2[of this Part or Chapter XII] or deducted from a payment under Division III of this Part 3[or Chapter XII] shall be

(a)held by the person in trust for the 4[Federal] Government; and

(b)not subject to attachment in respect of any debt or liability of the person. 1 Section 165C inserted by the Finance Act, 2025. 2Inserted by the Finance Act, 2003. 3 Inserted by the Finance Act, 2002. 4 Inserted by the Finance Act, 2003. 346 Chapter X – Procedure

(2)In the event of the liquidation or bankruptcy of a person who has collected 1[ ] or deducted tax from a payment under Division III of this Part 2[or Chapter XII], the amount collected or deducted shall not form part of the estate of the person in liquidation or bankruptcy and the Commissioner shall have a first claim for that amount before any distribution of property is made.

(3)Every amount that a person is required to deduct from a payment under Division III of this Part 3[or Chapter XII] shall be –

(a)a first charge on the payment; and

(b)deducted prior to any other amount that the person may be required to deduct from the payment by virtue of an order of any Court or under any other law.