New Income Tax Imposed On Dividends
New Income Tax Imposed On Dividends
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A person not appearing on the Active Taxpayers List (ATL) is liable to pay income tax at 70 percent dividends during the tax year 2022-2023.
The Federal Board of Revenue (FBR) has issued the latest withholding tax rates for the tax year 2022-2023. The rates have been made part of the Income Tax Ordinance, 2001, updated to June 30, 2022, which were amended through the Finance Act, 2022.
In its latest withholding tax card, the FBR issued rates of tax on dividend income for both persons appearing on the ATL and not on the ATL.
Tax collection on dividend income is made under Section 150 of the Income Tax Ordinance, 2001. Following are the latest tax rates on dividends applicable for the tax year 2022-2023:
| Sub Section and Description | Tax on ATL | Non-ATL |
| (a) Paid by independent Power Purchasers (IPPs) where such dividends is passed through items | 7.5% | 15% |
| (b) mutual funds, Real Estate Investment Trust (RIET), and cases other than (a), (c) and (d) | 15% | 30% |
| (c) Dividend received by a RIET scheme from special purpose vehicle | 0% | 0% |
| (c) Dividend received by others from special purpose vehicle as defined under the Real Investment Trust Regulations, 2015 | 35% | 70% |
| (d) A company where no tax is payable by such company due to exemption of income or carry forward of business losses under Part VIII Chapter III or claim of tax credits under Part X of Chamber III. | 25% | 50% |
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