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Tax on undistributed Profits
(1) For tax years 2017 to 2019 , a tax shall be imposed at the rate of five percent of its accounting profit before tax on every public company, other than a scheduled bank or a modaraba, that derives profit for a tax year but does not distribute at least twenty percent of its after tax profits within six months of the end of the tax year through cash :
Provided that for tax year 2017, bonus shares or cash dividends may be distributed before the due date mentioned in sub-section (2) of section 118, for filing of a return.
(2) The provisions of sub-section (1) shall not apply to—
(a) a company qualifying for exemption under clause (132) of Part I of the Second Schedule; and (b) a company in which not less than fifty percent shares are held by the Government.
Provided that for tax year 2017, bonus shares or cash dividends may be distributed before the due date mentioned in sub-section (2) of section 118, for filing of a return.
(2) The provisions of sub-section (1) shall not apply to—
(a) a company qualifying for exemption under clause (132) of Part I of the Second Schedule; and (b) a company in which not less than fifty percent shares are held by the Government.
Amendment history (4)
- section 5A substituted by the Finance Act, 2017. The substituted section
- The word “seven and half” substituted by the Finance Act, 2018
- The word “forty” substituted by the Finance Act, 2018
- The word “or bonus shares” omitted by the Finance Act, 2018
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
Source FBR PDF page 37
Unofficial reference, compiled from the FBR’s consolidated Income Tax Ordinance 2001 (amended up to 30 June 2026). Provided for general information only — not an official FBR publication and not legal or tax advice. Always verify against the official FBR text before relying on it for filing or any decision.