ISLAMABAD (June 09 2008): The Federal Board of Revenue (FBR) is likely to amend the Income Tax Ordinance 2001 in the 2008-09 budget to abolish redundant provisions relating to the taxation of dividend. Sources told reporters on Sunday that there was a separate system for taxation on dividend under the Ordinance 2001.
The dividend income is covered under presumptive tax regime under section 5 of the Ordinance 2001. Therefore, the reference of the same in section 39 of the Ordinance is misleading and, therefore, needs to be deleted.
The specific provision pertaining to tax on dividend says that a tax shall be imposed on every person who receives a dividend from a company. The tax imposed on a person who receives a dividend shall be computed by applying the relevant rate of tax to the gross amount of the dividend.
In the presence of the said section of Ordinance, there is no need to specify dividend taxation within 'Income from other Sources' under section 39 of the Ordinance.