Islamabad: (RightNow) The Supreme Court has rejected the FBR’s stance on collecting a 35% tax. The court dismissed FBR’s appeals as substandard and upheld the Islamabad High Court’s decision.

The Supreme Court ruled that only Section 5 applies to dividend income, and a 10% tax is legal. The court stated that this income is not a regular part but a separate block, and a specific tax system will remain in effect.

A two-member bench led by Chief Justice Yahya Afridi announced the decision. Justice Aqeel Ahmed Abbasi authored the verdict. The FBR aimed to collect 35% tax from companies, while companies argued that 10% is the final tax on dividend income.

The dispute was over the interpretation of Sections 5 and 39 of the Income Tax Ordinance 2001. The Islamabad High Court had already ruled in favor of taxpayers. The Supreme Court deemed FBR’s stance legally unacceptable.

It is noteworthy that Saudi Pak Industrial and Agricultural Investment Company, Fauji Foundation, and other companies had approached the court against FBR’s decision.