Dividend income

Income tax on dividend income for non-filer  is imposed at the rate of 20 percent. It is extreme injustice to charge income tax at an exorbitant rate when the dividend received is below Rs10,000. Previously, income tax was not deducted from dividend income if the amount paid was below Rs10,000. The budget will be announced in a couple of days. The finance minister should consider waiving the income tax on dividend income provided that the income received is less than Rs10,000. Or at least the tax rate should be reduced to 6 percent.

A high rate of income tax on dividend income discourages small investors, holding around 500 to 1000 shares, from further investment in the stock market. As a result, they turn towards spurious investment schemes. This narrows the investment base of the country’s economy as well. It is hoped that the concerned authorities will take notice of the issue.

Fayyaz Mahmood

Lahore