Final Tax Regime and Minimum Tax Chapter- 22
dividend is a pass through item under an Implementation Agreement or Power
Purchase Agreement or Energy Purchase Agreement and is required to be
re-imbursed by Central Power Purchasing Agency (CPPA-G) or its predecessor
or successor entity.
b) 15% in mutual funds, Real Estate Investment Trusts and cases other than
those mentioned in clauses (c) and (d);1 5%
(c) 0% in case of dividend received by a REIT scheme from Special purpose Vehicle
and 35% in case of dividend received by others from Special purpose Vehicle
as defined under the Real Estate Investment Trust Regulations, 2015; and]0 %
(d) in case of a 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.25%
Example: Which of the following incomes are chargeable to tax under Final Tax Regime or Normal
Tax Regime?
a. Dividend received by individual
b. Dividend received by company
c. Dividend received in specie by an individual
Solution:
In all the cases the dividend received is fully covered under Final tax regime.- Profit on debt [Section 151(3)] & 7B
The following are the various profits on debts that are chargeable to tax under this section where:
(a) Deposit or a certificate under the National Saving Scheme or Post Office Savings Account.
(b) Profit is being on a saving account or Profit and loss sharing account or deposit maintained with
the banking Company or financial institution.
(c) Profit on any bond, certificate, debenture etc. including term finance certificates, certificates of
investment issued by a banking company or a financial institution, company as defined in the
Companies Ordinance, 1984, body corporate or a finance society.
(d) Tax shall also be deducted from profit on securities other than (a) above issued by Federal
Government, Provincial Government or Local Government.
to any person other than a financial institution.
Zakat (where applicable under Zakat and Ushar Ordinance) shall be deducted from the amount of
profit on debt on payment to the recipient.
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.
Tax deductible on interest income from all of the above shall be Minimum tax (whether tax has been
deducted or not) under Separate Block of Income except the following:- A company
- Profit on debt in respect of a loan agreement between a borrower and a banking company or a
development finance institution. - As stated in (d) above.
- The rate of tax to be deducted under section 151 shall be 15% of the yield or profit.
Provided that the rate shall be 10% in cases where the taxpayer furnishes a certificate to the
payer of profit that during the tax year yield or profit paid is Rs. 500,000 or less.
a. Profit on debt is taxable @ 15% under section 7B where profit on debt is upto Rs.
5,000,000 other than a company.
b. Where profit on debt exceeds Rs. 5,00,000 other than a company then the same shall be
taxed under normal tax regime (NTR).
Example: Which of the following incomes are chargeable to tax under Minimum Tax Regime or
Normal Tax Regime?