thenews.com.pk 20 Sep, 2020 02:00 am

Tax collection from dividends more than doubles to Rs3.4bln in July-August

Tax collection from dividends more than doubles to Rs3.4bln in July-August
KARACHI: Tax collection from company dividends more than doubled to Rs3.4 billion in the first two months of the current fiscal year of 2020/21 as the government raised taxation on the payouts,...

Through the Finance Act 2019, the rate of tax was increased to 25 percent in the case of an individual receiving dividend from a company where no tax is payable by such company due to exemption of income or carry forward of business losses or claim of tax credits.However, the rate of tax is 15 percent in case of distribution of dividends by mutual funds.Prior to the Finance Act 2019, the rate of tax on dividends received by an individual from a mutual fund was 10 percent and 12.However, this rate of tax is applicable where such dividend is a passed through item under an implementation, power purchase or energy purchase agreements and is required to be reimbursed by Central Power Purchasing Agency or its predecessor or successor entity.

However, the withholding tax was prescribed at 15 percent in such cases.Through the Finance Act 2020, the rate of withholding tax has also been enhanced to 25 percent in such cases to address the inconsistency.

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