In line with the budget announcement, the National Clearing Company of Pakistan Limited (NCCPL) has made amendments in the Capital Gain Tax (“CGT”) System vide Finance Act, 2021.
As per the NCCPL notice, applicable capital gain tax rates for the year 2021-22, have been raised for investors not appearing in FBR Active Taxpayer List (ATL). The decision comes as the government intends to increase the number of taxpayers in the country.
The notice reads that for investors at the Pakistan Stock Exchange (PSX), which have acquired a security before July 1, 2013, no CGT will be charged. However, where security is acquired on or after July 1, 2013, investors appearing in ATL will have to pay 12.50% CGT, whereas investors not appearing in ATL will have to pay 25.00% CGT.
For investors dealing in mutual funds, where the holding period of security is more than four years, no CGT will be charged. Whereas, for individuals, association of persons and corporates dealing in stock funds - if dividend receipts of the fund are more than capital gains than CGT of 10.00% will be applicable on investors appearing ATL, whereas a CGT of 20.00% will be applicable on investors not appearing in ATL.
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Meanwhile, for individuals, an association of persons and corporates dealing in stock funds - if dividend receipts of the fund are less than capital gains, a 12.50% CGT will be applicable on taxpayers, whereas a CGT of 25.00% will be applicable on non-taxpayers.
For individuals dealing in other funds a 10.00% CGT will be applicable on taxpaying investors, whereas 20.00% CGT will be applied to non-taxpayers. Meanwhile, for corporate dealing in other funds, a CGT of 25.00% will be applicable on taxpaying investors, whereas a 50.00% CGT will be applicable to non-taxpayers.
As per the notice, for future commodity contracts entered into by members of the Pakistan Mercantile Exchange a 5.00% CGT will be applicable on investors appearing in ATL, whereas a CGT of 10.00% will be applicable on investors not appearing in ATL.