TAX YEAR 2021: tax rate on Sukuks

TAX YEAR 2021: tax rate on Sukuks

ISLAMABAD: Federal Board of Revenue (FBR) has updated tax rate on return on investment in Sukuks for the tax year (July 01, 2020 to June 30, 2021).

The FBR issued Income Tax Ordinance, 2001 (updated till June 30, 2020) after incorporating amendments brought through Finance Act, 2020. The FBR updated the rate of tax on return on investment in Sukuks.

Section 150A of Income Tax Ordinance, 2001 deals with return on investment in Sukuks as:

150A. Return on investment in Sukuks—Every special purpose vehicle, or a company, at the time of making payment of a return on investment in sukuks to a sukuk holder shall deduct tax from the gross amount of return on investment at the rate specified in Division IB of Part III of the First Schedule.

The rate of tax to be deducted under section 150A shall be—

(a) 25 percent in case the sukuk-holder is a company;

(b) 12.5 percent in case the sukuk-holder is an individual or an association of person, if the return on investment is more than one million;

(c) 10 percent in case the sukuk-holder is an individual and an association of person, if the return on investment is less than one million.