The members of the stock exchanges are not entitled to take credit of the tax deducted under section 233A of the Income Tax Ordinance, 2001 where the shares traded are not owned by them. The Federal Board of Revenue on Saturday clarified that the members of stock exchanges would certify the quantum of tax withheld under section 233A of the IT Ordinance, 2001 from each person who traded through them for submitting statement to the relevant Director General of the (RTO).
The FBR has issued an income tax circular 2 of 2009 to clarify an anomaly arising out of amendments in section 233A - collection of tax by stock exchange registered in Pakistan. According to the circular, the reference has been made to the Board to clarify as to who will take the credit of the tax withheld under clause (c) of sub-section (1) of section 233A of the Income Tax Ordinance, 2001. Whether the member of the stock exchange or the seller of shares who did the trading through the said member?
The matter has been considered by the Board. Though the tax in respect of trading of shares is deducted from the member by the stock exchange yet the tax so withheld under clause (c) of sub-section (1) of section 233A of the Income Tax Ordinance, 2001, does not pertain to him exclusively. He is only an intermediary and the tax withheld under the aforesaid provisions of law, belongs to the seller of shares also who traded through him. Legally speaking, the seller is entitled to take the credit of the tax so withheld as well as the member in respect of the shares owned by him. The member of the stock exchange is the custodian on record, as the transactions of shares are made through him on the stock exchange.
It is, therefore, clarified that the member would certify the quantum of tax withheld from each person trading through him and will furnish a statement, to the concerned Director General, RTO, for the verification of claim of the taxpayers who traded the shares through him, the circular added.
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