ISLAMABAD: The government on Wednesday issued capital gains tax (CGT) rules on securities trading; removing the last bottleneck in deducting the tax on sales of shares in the equity market.
The Federal Board of Revenue (FBR) issued a notification vetted by the Law Ministry, according to the tax officials. The issuance of these rules and amendments to the Income Tax Ordinance, 2001 were made to remove the anomalies identified in the previous CGT regime.
The authorities have inserted three more clauses to the CGT rules. Rule 13N gives detailed procedure for the computation, determination, collection and depositing CGT on securities trading. Rule 13O contains the periodic forms which will be filed to FBR and Rule 13P explains and clarifies provisions regarding the computation of capital gains and tax payable thereon under the eighth schedule of Income Tax Ordinance, 2001.
Since July 2010, the government had imposed CGT on the stock market. If investors sold their shares before six months of purchase, the tax rate levied was 10% while for selling after six months but before one year the rate was 7.5%.
The government revised the CGT regime in April this year, what is known as amnesty for the stock brokers. Since then the collection of tax had been halted due to ambiguity over the process. The chairman of the Securities and Exchange Commission of Pakistan (SECP) had stated that the government will initiate collection from April 2012 as they were successful in compiling complete record of transactions carried on the stock market. These rules were earlier issued for public consultation on July 20, 2012.
Published in The Express Tribune, September 13th, 2012.
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