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Revised procedure for computation of capital gains, tax on sale of shares unveiled

  • FBR amends Income Tax Rules 2002
  • Capital loss carried forward and new rules notified
Published June 26, 2021
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ISLAMABAD: The Federal Board of Revenue (FBR) has issued a revised procedure for computation of capital gains and collection of tax on disposal of securities by the National Clearing Company of Pakistan Limited (NCCPL). The FBR has amended Income Tax Rules, 2002, through a notification, issued here on Friday.

According to the notification, the FBR has notified that the setting off of eligible capital loss carried forward from previous tax years shall be made by the NCCPL, only in respect of taxpayers whose names appear on the Active Taxpayer List (ATL).According to the amendments, the setting off of eligible capital loss carried forward from previous tax years shall be made by the NCCPL only in respect of taxpayers whose names appears on the ATL pertaining to the tax year to which such losses pertain as witnessed by the ATL available on the FBR website after updation of the tax year to which such loss pertains.

The FBR stated that the capital loss arising on disposal of listed securities in tax year 2019 and onwards that has not been set off against the gain of the person from disposal of listed securities chargeable to tax during the tax year shall be carried forward to the following tax year and set off only against the gain of the person from disposal of listed securities chargeable to tax 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 determined.

Under the existing rules, the capital loss arising on disposal of listed securities in any financial year shall not be carried to a subsequent financial year.

The FBR further stated that the capital loss arising on disposal of listed securities in tax year 2019 and onwards that has not been set off against the gain of the person from disposal of listed securities chargeable to tax during the tax year shall be carried forward to the following tax year and set off only against the gain of the person from disposal of listed securities chargeable to tax 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 determined.

The capital loss arising on disposal of listed securities in tax year 2019 and onward shall be carried forward to a subsequent tax year for setting off, in the manner prescribed as follows:

(a) The setting off of eligible capital loss carried forward from previous tax year(s) shall be made by the NCCPL under this Rule, only in respect of a taxpayer whose name appear or appeared in the ATL pertaining to the tax year to which such loss pertains as witnessed by the ATL available on the FBR’s website after updation for the tax year to which such loss pertains;

(b) adjustment of carried forward capital loss(es) shall be made on a monthly basis by the NCCPL from the first month of updation of the ATL for that tax year and on first-in first-out (FIFO) basis;

(c) NCCPL may requisition date wise position of Active Tax Payers List [ATL] in respect of particular taxpayer from Information Technology (IT) Wing of the Board as and when required.

(d) At the end of relevant tax year, NCCPL shall maintain tax year-wise balance of unexpired carried forward capital losses separately identifiable for computation of limitation period for each tax year. (e) The manner of adjustment of capital loss carried forward from previous tax years will be in accordance with illustration, the FBR added.

Copyright Business Recorder, 2021

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