First Schedule (3rd Division) of the Income Tax Ordinance 2001

3rd Division of the First Schedule of the Income Tax Ordinance 2001 deals with the
  • Tax Rate on Dividends
  • Tax Rate on Profit on Debts
  • Tax Rate on Return on Investment in Sukuks received from a special purpose vehicle

Rates of Dividend Tax

(Section 5, First Schedule, Division-III, Part 1)

Received from IPPs

7.5%

Received from Mutual Funds & Others

15%

Received from Companies

25%

 

Rate of Tax on Profit on Debt

(Section 7B, First Schedule, Division-IIIA, Part 1)

Imposed under section 7B

15%

 

Rate of Tax on Return on Investment in Sukuks received from special purpose vehicle

(Section 5AA, First Schedule, Division-IIIB, Part 1)

In case of a Company

25%

In case of an individual or AOP when profit is more than 1 Million

12.5%

In case of an individual or AOP when profit is less than 1 Million

10%

What is a Dividend?
A dividend is a payment made by a company to its shareholders, usually in the form of cash, in the form of shares, and in the form of additional shares of stock.
What is Profit on Debts?
Profit on Debt refers to interest earned on money that is loaned out. It is the amount of money a lender earns in addition to the principal amount of a loan.
What is Sukuks?
Sukuk is a type of Islamic Financial Certificate, Similar to a bond in Western finance, that complies with Sharia, or Islamic religious Law. Sukuk represents ownership in tangible assets and the investor shares in the income generated by that asset.
What are IPPs?
IPPs stand for Independent Power Producers, which are private companies that generate electricity and sell it to the government or to other companies.

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