KARCHI: Through Finance Bill 2016, the rate of tax on dividends from mutual funds is proposed to include separate rates for filers and non-filers.
According to the proposes structure, individual investor will be charged 10 percent tax on dividends derived from stock funds, while rate of tax will be 10 percent for filer and 15 percent for non-filer on dividends derived from money Markey fund, income fund or any other fund.
For companies, rate of tax is 10 percent tax on dividends derived from stock funds, while rate of tax will be 25 percent for filer and 25 percent for non-filer on dividends derived from money Markey fund, income fund or any other fund.
For association of persons (AOPs), rate of tax is 10 percent tax on dividends derived from stock funds, while rate of tax will be 10 percent for filer and 15 percent for non-filer on dividends derived from money Markey fund, income fund or any other fund.
The Eighth Schedule was introduced through Finance Act, 2012 to cater for special regime for taxation of capital gains arising on sale of shares of listed companies.
Under that Schedule, NCCPL was effectively made the taxing agent for computing and collecting the tax on such gains. Nevertheless, gain on disposal of units of open ended mutual funds was kept outside the ambit of Eighth Schedule.
Moreover, the gain on redemption of units of open ended mutual funds will also be subject to the tax mechanism as laid down in the Eighth Schedule.
However, for that purpose, section 100B which governs Eighth Schedule has not been appropriately amended. This appears to be an omission.
The Asset Management Company (AMC) managing the fund will be responsible for providing necessary information to NCCPL for computing taxable gain and tax thereon on redemption of units.