Every time a stockholder receives a dividend, he has to pay the required tax and zakat. While dividend tax is usually quite straightforward, the amount of zakat deducted confuses a lot of people.<\/p>\n\n\n\n
Complaints like ‘they deducted 50% zakat on my dividend<\/strong>‘ and ‘why is the zakat deducted not 2.5%<\/strong>‘ are too common in PSX.<\/p>\n\n\n\n Today we will look at how the zakat is calculated and hopefully, this will remove all the confusion.<\/p>\n\n\n\n In the PSX, you pay zakat on the amount of shares<\/strong> you hold.<\/p>\n\n\n\n The formula for zakat is as follows:<\/p>\n\n\n\n The number of shares is the total quantity of stock<\/strong> on which you received the dividends.<\/p>\n\n\n\n The share face value<\/strong> is normally 10, but you can see the exact face value of your share on our PSX listed companies<\/a> page.<\/p>\n\n\n\n And finally, the 2.5\/100 part shows that the percentage of zakat to deduct is 2.5%<\/strong>.<\/p>\n\n\n\n Let’s understand the above process with an example.<\/p>\n\n\n\n Let’s say you hold 2000 shares of DCR<\/strong> and DCR announced Rs. 0.5<\/strong> dividend. The gross dividend you should receive is Rs. 1000<\/strong>.<\/p>\n\n\n\n The total zakat deducted on it, as per the above-mentioned formula, should be:<\/p>\n\n\n\n This comes down to Rs. 500<\/strong>. So Rs. 500 will be deducted. <\/p>\n\n\n\n This means you have paid half of your dividend in Zakat.<\/p>\n\n\n\n So while the zakat is indeed deducted at the rate of 2.5%, the total deduction according to the dividend amount received is actually 50%<\/strong> of the dividend, which may not be feasible for you.<\/p>\n\n\n\nZakat Calaulation in PSX<\/h2>\n\n\n\n
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Zakat = number of shares x share face value x 2.5 \/ 100<\/code><\/pre>\n<\/blockquote>\n\n\n\nExample<\/h3>\n\n\n\n
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2000 x 10 x 2.5 \/ 100<\/code><\/pre>\n<\/blockquote>\n\n\n\n