Withholding tax card for dividend income, return on Sukuk: updated for Tax Year 2019

KARACHI: Federal Board of Revenue (FBR) has updated withholding tax card for Tax Year 2019 incorporating amendment made to Income Tax Ordinance, 2001 through Finance Supplementary (Second Amendment) Act, 2001.

Following are the withholding tax rates for dividend income and return on investment in Sukuk under Section 150 and Section 150 A updated up to March 09, 2019 for Tax Year 2019.

Every persons paying dividend under Section 150 of Income Tax Ordinance, 2001 shall deduct withholding tax on the gross amount of dividend paid to the recipient at the following rates:

a. Purchaser of Wapda privatized power project, company setups for power generation or company supplying coal exclusively to power generation projects: 7.50 percent

b. the tax rate for filer (other than mentioned in (a) above): 15 percent

c. non-filers (other than mentioned in (a) above): 15 percent

i. in the case of collective investment scheme, REIT scheme or mutual funds, rate of tax on dividend paid shall be:

Stock Fund: Individual 12.50 percent; company 12.5 percent; Association of Person (AOP) 12.5 percent.

Money market Fund, Income Fund, or , REIT scheme or any other fund:

Individual: filer 12.5 percent; non-filer 15 percent

Company: filer 15 percent; non-filer 25 percent

AOP: filer 12.5 percent; non-filer 15 percent

ii. In case of Stock Fund if dividend recipient gain, the rate of tax shall be: 12.5 percent

iii. In the case of Money Market Mutual Fund, the rate of tax on dividend paid up to Rs2.5 million, to a person (i.e. individual and AOP) other than company, shall be: 10 percent

iv. In the case of Rental REIT, the rate of tax on dividend paid to an Individual shall be: 7.5 percent

The withholding tax for return on investment in Sukuk under Section 150A shall be deducted by special purpose vehicle, company from Sukuk holders on payment of gross amount on return on investment.

The withholding tax rates will be:

a) In case the Sukuk- holder is a company: 15 percent

b) In case the Sukuk – holder is an individual or an association of person, if the return on investment is more than one million: 12.50 percent

c) In case the Sukuk – holder is an individual and an association of person, if the return on investment is less than one million, 10 percent, and

d) In case the Sukuk – holder is a non-filer: 17.50 percent

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