KARACHI: National Clearing Company of Pakistan Limited (NCCPL) on Wednesday informed investors of Pakistan Stock Exchange (PSX) that tax rate on capital gain will be 100 percent higher for those not appearing in Active Taxpayers List (ATL).
In a letter communicated to Pakistan Stock Exchange (PSX), the NCCPL said that through Finance Supplementary (Second Amendment) Act, 2019 amendments had been made to Income Tax Ordinance, 2001 under which 100 percent tax rate would be collected from those investors who were either not filed their income tax returns or late filers.
The NCCPL has been authorized withholding agent to collect Capital Gain Tax (CGT) on behalf of Federal Board of Revenue (FBR) from investors of the PSX.
The NCCPL said that 100 percent increased CGT rate will be applied to all the categories of investors not appearing in the ATL provided by the FBR.
In Case of PSX the CGT rates for year 2019/2020 is as follow:
— Where the security was acquired before July 01, 2013: zero percent will be for both investors in ATL and non-ATL.
— Securities Acquired before July 1, 2016. Where holding period of a security is twenty-four months or more but the security was acquired on or after 1st July, 2013: the CGT rate will be 7.5 percent for ATL and 15 percent for not appearing in ATL.
— Securities Acquired on or after July 1, 2016: the tax rate will be 15 percent for ATL and 30 percent for those not appearing in ATL.
— Cash settled derivatives traded on Stock Exchange: the tax rate will be 5 percent and 10 percent for those not appearing in ATL.
In case of MUFAP
— Where the holding period of securities more than Four years: The tax rate will be zero percent for both investors having ATL or non-ATL status.
— Stock Funds: For individuals and corporate if Dividend receipts of the fund are more than capital gains: the tax rate will be 10 percent for ATL and 20 percent for those investors not appearing in ATL.
— Stock Funds: For individuals and corporate if dividend receipts of the fund are less than capital gains: the tax rate will be 12.50 percent and 25 percent for investors not appearing in ATL.
— Other than Stock Funds – For individuals: the tax rate will be 10 percent for ATL and 20 percent for non-ATL.
— Other than Stock Funds – For Corporate: the tax rate will be 25 percent for ATL and 50 percent for investors not appearing on ATL.
In case PMEX
— Future Commodity Contracts executed at Pakistan Mercantile Exchange: The tax rate will be 5 percent for ATL and 10 percent for investors not appearing on ATL.
The NCCPL explained Section 37A of Income Tax Ordinance, 2001, as:
Loss sustained on disposal of listed securities in tax year 2019 and onwards that has not been set off against the gain of the person from disposal of securities chargeable to tax under section 37A shall be carried forward to the following tax year and set off only against the gain of the person from disposal of securities chargeable to tax under section 37A, but no such loss shall be carried forward to more than three tax years immediately succeeding the tax year for which the loss was first computed.