After the passage of almost three months, the collection of Capital Gains Tax (CGT) on share trading is expected to start by the mid of September 2012. It is learnt that the Ministry of Law has drafted the rules with some changes after receiving public comments.
The law ministry would send the finalised and approved rules to the Federal Board of Revenue (FBR) in next couple of days. And the FBR is expected to issue SRO any time during next week, sources said. The CGT was imposed on share trading at the rate of 10 percent if the holding period is less than six months and eight percent if the holding period is between six to 12 months.
The President of Pakistan promulgated Finance (Amendment) Ordinance, 2012 in April this year stated that the investors will not be asked about the source of income of the amount invested in companies listed at local bourses till June 30, 2014. Later, the said Ordinance was made part of Finance Bill 2012. The revised capital gains tax regime was to be implemented with effect from July 1, 2012, but the tax collection process could not start due to the absence of relevant rules.
The NCCPL was appointed the CGT collecting agent on behalf of Federal Board of Revenue to avoid direct interaction of tax officers with investors. The NCCPL had developed an automated system to collect CGT from the market participants. Presently, only two taxes namely CVT on sale and purchase of shares at the rate of 0.01 percent and FED on commission at the rate of 16 percent are being collected on share trading.