The National Clearing Company of Pakistan (NCCPL) has been mandated to adjust the capital gain tax (CGT) liability based on the status of investor as filer or non-filer as per the Active Taxpayers’ List at the end of the tax year.
The FBR issued an S.R.O. 1768(1)/2022 on Tuesday to issue amendments to the Income Tax Rules, 2002. The FBR has also explained the Tax Treatment for the Bonus Share Entitlement prior to the 1st July 2014 or from 1st July 2018 onwards.
The FBR stated that where bonus share entitlement is prior to the first day of July 2014 or from the first day of July 2018 onwards, the cost of such shares shall be computed by spreading the cost of old shares over the old shares plus the bonus shares taken together.
This cost of a share shall be the same for the old shares and the new shares. Subsequently, when such bonus shares are disposed of, such cost shall be taken for computation of capital gain and tax thereon.
Similarly, the cost of old shares shall be taken the same as for bonus shares, and when the old shares are disposed of, such cost shall be taken for computation of capital gain and tax thereon, even if these are sold prior to the crediting of bonus shares in the shareholder’s account but after the date of entitlement of bonus shares.
The FBR has also explained the Tax Treatment for the Bonus Share entitlement during July 1, 2014, till June 30, 2018.
From the first day of July 2014 till the thirtieth day of June 2018 for computation of capital gain tax, the cost of bonus shares shall be the price prevailing on the first day of book closure (ex-bonus price). Subsequently, when such bonus shares are disposed of, such cost shall be taken for computation of capital gain and tax thereon.
Similarly, the cost of old shares shall remain the same before and after bonus shares are issued, and when the old shares are disposed of, such cost shall be taken for computation of capital gain and tax thereon, even if these are sold prior to the crediting of bonus shares in the shareholder’s account, but after the date of entitlement of bonus shares.
The sale proceeds of the letter of rights (LoR) or rights shares shall be the market price of the LoRs or rights shares as received by the investor. The cost of acquisition of LoRs shall be the price paid, if any, by the investor to acquire such LoRs.
The cost of acquisition of the right shares shall be the price paid by the investor to acquire those right shares, including the price paid for acquisition of LoRs provided that where right shares are not credited on or before 4S days from the date of delisting of LoRs by CDC, these LoRs shall be deemed as disposed of at zero price. The capital gain or loss on disposal of LoRs or rights shares shall be computed as the difference of consideration received from disposal and the cost of acquisition, FBR added.
