Withholding tax rates on dividend payment for 2021-2022

Withholding tax rates on dividend payment for 2021-2022

The Federal Board of Revenue (FBR) has issued updated rates of withholding tax on payment of dividend for the year 2021-2022.

The withholding tax shall be collected by every person paying dividend from the recipients of dividend at the time the dividend actually paid.

The FBR collect withholding tax on dividend payment under Section 50 of the Income Tax Ordinance, 2001.

WITHHOLDING TAX CARD 2021/2022

Tax shall be deducted on the gross amount of dividend paid:

(a) In the case of dividend paid or collect tax from the amount of dividend in specie by Independent Power Purchasers (IPPs) whereas such dividend is a pass through item under an Implementation Agreement or Power Purchase Agreement or Energy Purchase Agreement and is required to be reimbursed by Central Power Purchasing Agency (CPPA-G) or its predecessor or successor entity:

The tax rate shall be 7.5 per cent.

Persons not appearing in the Active Taxpayers’ List (ATL): The applicable tax rate is to be increased by 100 per cent under Rule-1 of Tenth Schedule to the Income Tax Ordinance 2001.

(b) In mutual funds and real estate investment trust cases other than mentioned at (a) above and (ba) below:

The tax rate shall be 15 per cent.

Persons not appearing in the ATL: The applicable tax rate is to be increased by 100 per cent under Rule-1 of Tenth Schedule to the Income Tax Ordinance, 2001.

(ba) In case of person receiving dividend from a company where no tax is payable by such company, due to exemption of income or carry forward of business losses under Part-VIII of Chapter-III or claim of tax credits under Part-X of Chapter-III.

The tax rate shall be 25 per cent.

Persons not appearing in the ATL: The applicable tax rate is to be increased by 100 per cent under Rule-1 of Tenth Schedule to the Income Tax Ordinance, 2001.

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