KARACHI: Pakistan Stock Exchange (PSX) has recommended the government to align capital gain tax (CGT) on disposal of securities with the rates of CGT with immovable properties using same slabs of holding periods as those on real estate.
The PSX in its proposals for budget 2019/2020 said that such proposal would encourage documentation in real estate activity, and lead to an easing of speculative pressure on real estate property prices in Pakistan.
The PSX said that at present the tax rates on capital gains from the disposal of securities are prescribed using various slabs that denote the holding period of the securities.
“The tax on these comparable slabs of holding periods of securities is higher than those for immovable property, and not aligned with the CGT on disposal of real estate, and result in making the real estate sector particularly appealing to investors when compared to capital markets.”
The alignment of these tax rates will also lead to an easing of speculative pressure on real estate property prices in Pakistan, where much of the undocumented wealth has been currently flowing.
The PSX proposed amendment in Division VII, Part I of the First Schedule to the Income Tax Ordinance, 2001, the following new table shall be interested in place of existing table:
For securities acquired on or after July 01, 2016
01. Where holding period of a security is up to on year: 10 percent for filer, 20 percent for non-filer
02. Where holding period of a security is more than or equal to one year but less than two years: 7.50 percent for filers, 20 percent for non-filers
03. Where holding period of a security is more than or equal to two years but less than three years: 5 percent for filers, 20 percent for non-filers
04. Where holding period of a security is more than three years: zero percent for both filers and non-filers
For securities acquired before July 01, 2016:
05. Where holding period of a security is up to three years: 5 percent for filers, 20 percent for non-filers
06. Where holding period of a security is more than three years: zero percent for both filers and non-filers.
The PSX in its proposals for budget 2019/2020 said that such proposal would encourage documentation in real estate activity, and lead to an easing of speculative pressure on real estate property prices in Pakistan.
The PSX said that at present the tax rates on capital gains from the disposal of securities are prescribed using various slabs that denote the holding period of the securities.
“The tax on these comparable slabs of holding periods of securities is higher than those for immovable property, and not aligned with the CGT on disposal of real estate, and result in making the real estate sector particularly appealing to investors when compared to capital markets.”
The alignment of these tax rates will also lead to an easing of speculative pressure on real estate property prices in Pakistan, where much of the undocumented wealth has been currently flowing.
The PSX proposed amendment in Division VII, Part I of the First Schedule to the Income Tax Ordinance, 2001, the following new table shall be interested in place of existing table:
For securities acquired on or after July 01, 2016
01. Where holding period of a security is up to on year: 10 percent for filer, 20 percent for non-filer
02. Where holding period of a security is more than or equal to one year but less than two years: 7.50 percent for filers, 20 percent for non-filers
03. Where holding period of a security is more than or equal to two years but less than three years: 5 percent for filers, 20 percent for non-filers
04. Where holding period of a security is more than three years: zero percent for both filers and non-filers
For securities acquired before July 01, 2016:
05. Where holding period of a security is up to three years: 5 percent for filers, 20 percent for non-filers
06. Where holding period of a security is more than three years: zero percent for both filers and non-filers.
