ISLAMABAD: The procedure of capital gain on disposal of securities will remain applicable on transactions of shares of listed companies as recorded in the system of the National Clearing Company of Pakistan Limited (NCCPL).

The FBR has issued draft of certain further amendments to the Income Tax Rules, 2002 through an SRO 640(l)/2023 issued on Wednesday.

According to the draft rules, the FBR has clarified that the provisions of section 37A of the Income Tax Ordinance 2001 shall remain applicable on transactions of shares of listed companies as recorded in the system of the NCCPL and reported in accordance with Eighth Schedule of the Income Tax Ordinance, 2001.

A tax expert has raised a question whether the said draft amendment in the income tax rules has any linkage with the proposed taxation of companies reserves in the upcoming budget. aUnder the draft rules, section 37A (Capital gain on disposal of securities) shall not apply to the disposal of shares of listed companies otherwise than through registered stock exchange and which are not settled through NCCPL. For the purposes of second proviso to sub-section (1) of section 37A, “shares of a listed company” shall not include units of a mutual fund or collective investment scheme or a REIT scheme or derivative products and provisions of section 37A shall remain applicable on disposal of such units, schemes or products. The State Bank of Pakistan shall not allow transfer or registration of repatriable shares unless prescribed certificate from the Commissioner, to the effect that the tax liability under sub-sections (6) to (10) of section 37 is discharged, is provided by the person selling the shares, the revised rules added.

Copyright Business Recorder, 2023