Tax on Dividend Income in Pakistan (TY 2025-26)
Pakistan dividend income tax TY 2025-26 - Section 150 final tax 15% filer / 30% non-filer, mutual funds, foreign dividends, REIT rates, and IRIS filing.
Worked example: Rs 50,000 per month
Annual income Rs 600,000 - here's how it would be taxed both ways under Finance Act 2025.
| Taxable income band | Rate | Income in band | Tax in band |
|---|---|---|---|
| Up to Rs 600,000 | 0% | Rs 600,000 | Rs 0 |
| Total slab tax | Rs 0 | ||
Section 150 final tax on dividends
PSX-listed company dividends are taxed under Section 150 as final tax - 15% for filers on the Active Taxpayer List, 30% for non-filers. The deduction happens at source: when the company declares the dividend, the registrar or CDC deducts the tax before crediting your account. Because it is final tax, you cannot offset capital losses against it and you cannot adjust it against your slab liability. It is simply done and dusted at the moment of declaration.
Special dividend categories
Not every dividend falls under the standard 15%/30% rate. IPP (independent power producer) dividends are taxed at a reduced 7.5%/15% under Section 150. REIT (Real Estate Investment Trust) dividends face a higher 25%/50% rate. Mutual fund dividend distributions (different from capital gain on redemption) fall under the standard 15%/30%. Foreign dividends - from US, UK, or other overseas portfolios - are taxed at your normal slab rate as part of total income, with DTAA credit available for foreign tax paid.
How to declare on your IRIS return
Even though dividends are final tax, you must still declare them on your IRIS return - for transparency and wealth-statement reconciliation. Domestic dividends go under code 5006 (PSX dividend income), foreign dividends under the appropriate foreign-income code. The tax already deducted by the registrar appears as Section 150 WHT credit. Skipping the declaration creates a wealth-statement gap FBR will eventually flag, especially if the cash visibly increased your assets year over year.
Filer vs non-filer: why ATL matters here
The dividend tax doubles for non-filers - 30% instead of 15% on every dividend payment, every year. A retiree drawing PKR 1 million a year in PSX dividends pays PKR 150,000 as a filer or PKR 300,000 as a non-filer; staying on the ATL by filing a NIL return (if you have no other income) costs almost nothing and saves PKR 150,000 directly. Mutual fund distributions, IPP dividends, and REIT dividends all carry the same 2× non-filer premium.
Frequently asked questions
How is dividend income taxed in Pakistan?
Under Section 150 as final tax - 15% for ATL filers and 30% for non-filers. The deduction happens at source; you cannot offset losses or adjust against slab tax.
Do I have to declare dividends if they're final tax?
Yes. Declaration is required for transparency and wealth-statement reconciliation, even though the tax is final and not adjusted on the slab base.
What's the dividend tax rate for non-filers?
30% under Section 150 - double the filer rate. The premium for staying off the ATL is large; even a NIL return on time keeps you at the 15% filer rate.
Are mutual fund distributions taxed the same as PSX dividends?
Standard mutual funds: yes, 15%/30% under Section 150. Capital gains on redemption are separate, governed by the Eighth Schedule with category-dependent rates.
How are foreign dividends taxed in Pakistan?
Foreign dividends are taxed at your normal slab rate as part of total income, with DTAA credit available for foreign tax already withheld at source.