KARACHI: Federal Board of Revenue (FBR) has updated tax rate for profit on debt to be applicable during tax year 2021 (July 01, 2020 – June 30, 2021).
The FBR issued Income Tax Ordinance, 2001 (updated June 30, 2020) after incorporating amendments brought through Finance Act, 2020. The FBR updated following rate of tax on profit on debt.
The rate of tax for profit on debt imposed under section 7B shall be—
|S.NO||Profit on Debt||Rate of tax|
|1.||Where profit on debt does not exceed Rs.5,000,000||15%|
|2.||Where profit on debt exceeds Rs.5,000,000 but does not exceed Rs.25,000,000||17.5%|
|3.||Where profit on debt exceeds Rs.25,000,000 but does not exceed Rs. 36,000,000||20%|
The tax rate is deducted under Section 7B of Income Tax Ordinance, 2001, under which:
Section 7B. Tax on profit on debt.—(1) Subject to this Ordinance, a tax shall be imposed, at the rate specified in Division IIIA of Part I of the First Schedule, on every person, other than a company, who receives a profit on debt from any person mentioned in clauses (a) to (d) of sub-section (1)of section 151.
(2) The tax imposed under sub-section (1) on a person, other than a company, who receives a profit on debt shall be computed by applying the relevant rate of tax to the gross amount of the profit on debt.
(3) This section shall not apply to a profit on debt that –
(a) is exempt from tax under this Ordinance; or
(b) exceeds thirty six million Rupees.