ISLAMABAD: The Federal Board of Revenue (FBR) has recorded a 21 percent increase in income tax collection from dividends during the first seven months (July 2025 to January 2026) of fiscal year 2025-26 (FY26), compared with the same period last year.
According to provisional data, dividend-related income tax collections rose to Rs116.31 billion in 7MFY26, up from Rs96 billion in the corresponding months of FY25, reflecting a significant year-on-year improvement.
Despite the overall growth, collections in January 2026 declined by 28 percent to Rs3.92 billion, compared to Rs5.46 billion in January 2025.
Under Section 150 of the Income Tax Ordinance, 2001, tax on dividends is deducted at source at varying rates depending on the nature of the dividend and the recipient’s status on the Active Taxpayers List (ATL), with non-ATL persons subject to double rates.
Applicable rates include 7.5 percent for dividends paid by Independent Power Producers reimbursed by CPPA-G, 15 percent for REITs and most other cases, 25 percent or 15 percent for mutual funds depending on income type, 0 percent or 35 percent for certain Special Purpose Vehicles under REIT rules, and 25 percent for companies enjoying tax exemptions or carrying forward losses.
The latest figures underscore strong growth in dividend tax receipts during FY26, despite monthly fluctuations, indicating continued efforts by the FBR to enhance compliance and expand the tax base.
