A senior official of Inland Revenue Service (IRS) will visit Karachi Stock Exchange (KSE) and National Clearing Company of Pakistan (NCCPL) at Karachi on Tuesday (February 14) to practically study the system of the NCCPL before declaring it as withholding agent to deduct and deposit the capital gains tax (CGT) from investors of stock exchanges.
Sources told Business Recorder here on Sunday that the Securities and Exchange Commission of Pakistan (SECP) and NCCPL have finalised all arrangements to give a detailed briefing to the FBR official for practical demonstration of the transactions taking place at the NCCPL. In this connection, the SECP/NCCPL officials would explain the whole system of stock market transactions and proposed mechanism for deduction of tax by the NCCPL being withholding agent. The SECP/NCCPL officials would also highlight the proposed system of deduction of tax on the stock market transactions for better understanding of the tax official.
It would be explained that how the tax would be automatically be deducted under the automated procedures of the NCCPL. The queries raised by the tax official would be dully clarified for timely implementation of the new system. Once the tax official would analyze and endorse the new system of the NCCPL, the SECP/NCCPL would finally devise and implement the system. However, it is only possible after certification of the new system of tax deduction by the FBR. Following clearance from the FBR, the SECP and the NCCPL would finalise the system in the light of legal viewpoint and guidelines of the tax authorities.
According to sources, at present the CGT Rules of the FBR have covered certain types of transactions for collection of the CGT on stock market investment. Under the revised regime of the CGT, SECP would ensure to deduct and collect tax on all kinds of transactions of capital market to ensure deduction and maximum collection of the CGT. The new system will be made in line with the recommendations made by the FBR. The relevant rules will be framed as per definitions and legal framework being provided by the FBR to ensure that all relevant capital market transactions be covered under the proposed system on the CGT. If the FBR wanted to include or exclude some kind of transactions from the purview of the new regime, it would be accepted by the SECP and the new system would be implemented in line with the FBR''s guidelines on the new system.