Karachi, July 21, 2024 – The National Clearing Company of Pakistan Limited (NCCPL) has announced updated capital gains tax (CGT) rates as mandated by the Finance Act, 2024. The NCCPL, which collects taxes on behalf of the Federal Board of Revenue (FBR), has outlined the new rates applicable from July 1, 2024, for income generated within Pakistan’s capital markets.
Updated CGT Rates
The NCCPL’s notification includes detailed CGT rates based on the holding period of securities and whether the investors are listed on the Active Taxpayer List (ATL). The rates are as follows:
Securities Acquired Before July 1, 2013:
• ATL Investors: 0%
• Non-ATL Investors: 0%
Securities Acquired Between July 1, 2013, and June 30, 2022:
• ATL Investors: 12.5%
• Non-ATL Investors: 12.5%
Securities Acquired Between July 1, 2022, and June 30, 2024:
• Holding Period Does Not Exceed One Year:
o ATL Investors: 15.0%
o Non-ATL Investors: 15.0%
• Holding Period Does Not Exceed Two Years:
o ATL Investors: 12.5%
o Non-ATL Investors: 12.5%
• Holding Period Exceeds Two Years but Does Not Exceed Three Years:
o ATL Investors: 10.0%
o Non-ATL Investors: 10.0%
• Holding Period Exceeds Three Years but Does Not Exceed Four Years:
o ATL Investors: 7.50%
o Non-ATL Investors: 7.50%
• Holding Period Exceeds Four Years but Does Not Exceed Five Years:
o ATL Investors: 5.00%
o Non-ATL Investors: 5.00%
• Holding Period Exceeds Five Years but Does Not Exceed Six Years:
o ATL Investors: 2.50%
o Non-ATL Investors: 2.50%
• Holding Period Exceeds Six Years:
o ATL Investors: 0.00%
o Non-ATL Investors: 0.00%
Securities Acquired On or After July 1, 2024:
• ATL Investors: 15.0%
• Non-ATL Investors: Rates as specified in the First Schedule, Part 1, Division 1 for individuals and association of persons, and Division II for companies. The rate for individuals and associations of persons shall not be less than 15% in any case.
Additional CGT Rates for Corporates:
• A CGT rate of 29% will be applied to corporates not listed on the ATL unless they submit the necessary documentation regarding their status as a small company to the NCCPL.
Commodity Contracts on PMEX:
• For future commodity contracts entered into by members of the Pakistan Mercantile Exchange (PMEX):
o ATL Investors: 5.00%
o Non-ATL Investors: 5.00%
Mutual Funds (MUFAP):
• Stock Funds:
o Individual, Association of Persons, and Company: 15.0%
• Other Funds:
o Individual and Association of Persons: 15.0%
o Company: 25.0%
• Securities Acquired On or Before June 30, 2024, with a Holding Period Exceeding Six Years:
o ATL Investors: 0%
o Non-ATL Investors: 0%
Implementation and Compliance
The updated CGT rates emphasize the government’s commitment to streamline tax collection and enhance revenue from capital market activities. Investors and corporates are urged to comply with the new rates to avoid any legal or financial repercussions. The NCCPL will continue to work closely with the FBR to ensure efficient and accurate tax collection, providing necessary support to investors for compliance.
The NCCPL’s notification of updated CGT rates marks a significant step towards refining Pakistan’s tax regime in the capital markets. By aligning the CGT rates with the Finance Act, 2024, the government aims to foster a transparent and efficient tax system that supports economic growth while ensuring fair taxation. Investors are advised to stay informed and adhere to the updated rates to contribute to the nation’s fiscal stability and development.
(Note: Please Visit FBR’s official website for accurate rates)