FBR issues draft amendments to Income Tax Rules

The Federal Board of Revenue (FBR) has issued draft amendments to the Income Tax Rules with respect to treatment of profit made on sale of borrowed shares under Margin Trading Scheme and Margin Financing Scheme, wash sales, extension in e-filing of statement of advance tax and information regarding members, brokers, investors of stock exchange.
The draft of further amendments to the Income Tax Rules, 2002, which the FBR proposes is hereby published as required for the information of all persons likely to be affected and the draft will be taken into consideration after 15 days of its publication in the official gazette," the FBR notification said.
Any suggestion or objection, which may be received from any person, before the expiry of the aforesaid period, will be considered by the Federal Board of Revenue, it added.
According to the draft amendments, (a) in rule 13E, after sub-rule (5), the following shall be added "(6) Profit made on sale of borrowed shares shall be treated as capital gain when such shares are acquired for their return to Authorised Intermediary Period intervening between acquisition and disposal of such borrowed shares shall determine the holding period in which the capital gain or loss falls.
Specific Identification Method shall be used to determine the acquisition cost and consideration for disposal of such securities. The difference between cost of acquisition and consideration received against disposal (net off all borrowing costs) of such shares shall be treated as capital gain or loss. This rule shall be applicable to the securities borrowed in accordance with the Securities Lending and Borrowing Scheme approved by the Securities and Exchange Commission of Pakistan (SECP).
(7) Profit made on disposal of shares acquired under Margin Finance Scheme, Margin Trading Scheme or other Financing or Leverage schemes approved by the SECP shall be treated as capital gain. The difference between cost of acquisition (inclusive of borrowing cost) and consideration received against disposal of such shares shall determine the quantum of capital gain or loss."
(b) In rule 13F, in sub rule (1), for clause (a), the following shall be substituted namely:-
"(a) Wash Sales where capital loss realized on sale of specific security by an investors is preceded or followed in one month's period by purchase of the same securities by the same investor whereby the transaction falls within one month between same two parties or their related parties where one was seller and other was buyer and they change places becoming buyer and seller respectively, thus maintaining the portfolio."
( c ) In rule 13H, in sub rule (2), for word "seven" the word "twenty-one" shall be substituted and (d) for rule 13J, the following shall be substituted namely:- "13J Exchange of Information:- (1) Information regarding member, broker, investor of the stock exchange required by the Federal Board of Revenue shall be obtained directly from National Clearing Company of Pakistan Limited (NCCPL."