The Federal Board of Revenue (FBR) has decided on collecting Capital Gains Tax (CGT) annually, instead of monthly collections. This will now provide more liquidity to investors for selling shares of publicly listed companies.
Tax filers are liable to pay 15 percent CGT on the sale of shares on profit. Non-tax filers are liable to pay 30 percent CGT on profit. The losses on sales of shares are adjustable over a three-year period.
Prior to this agreement, the losses were needed to be adjusted annually. The National Clearing Company of Pakistan Limited (NCCPL) collects CGT on behalf of the revenue board. Combined, these factors were causing a lack of liquidity for investors.
This new rule will also benefit the revenue authority through the ease of buying and selling of shares. CGT increases when the stock market is performing well and liquidity is a major determinant for PSX performance. With higher liquidity, the sale of shares will also get a boost, and ultimately aid in higher CGT collection as well.