Islamabad, 10 June 2025: A significant shift in Pakistan’s fiscal policy, outlined in the recently announced budget for the 2025-26 financial year, is poised to deliver a Dividend Tax Jolt to investors in mutual funds.
The government has opted to modify the levy rates applicable to these investment vehicles, with the rates now contingent on the proportion of income generated from debt securities versus equities within their average annual portfolios.
Under the new directives, income derived from mutual funds, specifically that stemming from average annual investments in debt securities, will now be subject to a revised tax rate of 15 percent.
Conversely, income attributed to equity holdings within these funds will face a higher impost of 25 percent.
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This upward adjustment in dividend tax rates for mutual funds is reportedly aimed at harmonising the fiscal treatment of investment gains with the nation’s broader revenue objectives, thereby striving to ensure an equitable contribution from various income streams.
The implementation of these differentiated rates is seen as a strategic manoeuvre to strike a balance between the government’s pressing financial requirements and the ongoing need to preserve incentives for diverse forms of capital deployment. This Dividend Tax Jolt is a key element of the broader revenue generation strategy.
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The cumulative financial impact of this particular measure is projected to yield approximately Rs. 14,000 million in additional state revenue.
