The Federal Board of Revenue (FBR) is examining a budget proposal for not suddenly increasing the rate of capital gains tax (CGT) from 10 to 17.5 per cent on securities traded at the stock exchanges in budget (2014-15).
Sources told Business Recorder here on Sunday that the FBR is seriously reviewing the proposal to increase the CGT rate from 10 to 17.5 percent in a phase-wise manner. But the rate would not be suddenly enhanced from 10 to 17.5 per cent as per existing law. Stock exchanges had proposed that the rate of CGT on disposal of securities be kept unchanged at 10 per cent (for holding period of less than six months) from Tax Year 2015 onwards. The rate of CGT shall drastically increase from 10 to 17.5 per cent for the Tax Year 2015 on disposal of securities held for less than 6 months. This has been principally agreed not to immediately increase the CGT rates from 10 to 17.5 per cent.
The Federal Board of Revenue (FBR) has also proposed doubling of withholding tax rates on cash withdrawal from banks and electricity bills in cases of non-taxpayers as compared to existing withholding tax rates for National Tax Number (NTN) holders filing returns from 2014-15.
Sources said that the FBR has proposed the Ministry of Finance to enhance rate of withholding tax from 10 per cent to a considerably high level where non-NTN holder industrial and commercial units are operating in the country.
The FBR can also provide the lists of the NTN holders filing returns to the banks. As the banks have computerised national identity card numbers (CNICs) based system, the banks can identify non-filers of returns and charge higher rate of withholding tax on cash withdrawal from banks.
The FBR will not implement the proposal of decreasing sales tax rate from 17 per cent to single digit rate. It requires complete revamping of the system and it would be done in the next six months or more period.
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