The National Clearing Company of Pakistan Limited (NCCPL) on Wednesday notified the additional capital gains tax on investors who didn’t appear in the latest active taxpayers list (ATL).
The increase in taxes was in line with an amendment into a tax law introduced earlier this year.
The NCCPL said investors not appearing in ATL for 2019/20 will need to pay an additional 100% capital gains tax (CGT) than those who are included in the ATL right now. In March, an amendment into the Income Tax Ordinance 2001 was introduced in the Finance Supplementary (Second Amendment) Act 2019 which has enforced revised rates for filers and non-filers.
NCCPL is the authorized withholding agent that deducts CGT from investors of the Pakistan Stock Exchange (PSX) on behalf of the Federal Board of Revenue (FBR).
How much will be applicable?
- Zero percent CGT will apply to securities acquired before July 1, 2013.
- CGT rate will be 7.5% for ATL investors and 15% for non-ATL investors on securities acquired before July 1, 2016. Where holding period of a share in a year or more, but the share was acquired on or after 1 July 2013.
- The tax rate will be 15% for ATL investors and 30% for non-ATL investors on securities acquired on or after July 1, 2016. The CGT rate will be 5% and 10% for cash-settled derivatives traded on the PSX.
- Zero percent CGT will be applicable for all investors on mutual fund units where the holding period of securities is more than four years.
- CGT of 10% for ATL investors and 20% for non-ATL investors will be applicable on stock funds for individuals and corporations if dividends received from the fund are higher than the capital gains.
- CGTs of 12.5% and 25% will be applicable on stock funds for individuals and corporations if dividend receipts from the fund are less than capital gains.
- CGT of 10% and 20% will be collected from individual investors on funds other than stock funds.
- CGT of 25% and 50% will be collected from corporate investors on funds other than stock funds.
- Tax rates will be 5% and 10% on future commodity contracts executed at the Pakistan Mercantile Exchange.
Loss carried forward settlement
Loss sustained on disposal of listed securities in the tax year 2019 and onwards will be carried forward to the following tax year and set off only against the gain from disposal of securities, “but no such loss shall be carried forward to more than three tax years immediately succeeding the tax year for which the loss was first computed”.