August 02, 2023 (MLN): The government has introduced several important amendments to the Income Tax Ordinance, 2001 through the Finance Act, 2023, a circular issued by Revenue Division showed.
One of the key amendments includes the provisions related to capital gains on securities and shares to ensure proper tax collection.
New provisions inserted require the acquirer of the capital asset (being shares of the company, other than shares of companies listed on the registered stock exchange traded on said stock exchange and settled by the (NCCPL), to deduct advance adjustable tax at the rate of 10% from the gross amount of the sale consideration at the fair market value of shares.
Capital gain arising on the disposal of shares of a listed company that is made otherwise than through the registered stock exchange and which is not settled through NCCPL is taxed.
Capital gains arising on the disposal of securities that were acquired before July 01, 2013, will be subject to tax at 0% as compared to 12.5% previously.
Moreover, the reduced rate based on the holding period shall continue to apply to securities acquired on or after July 1, 2022.
The fair market value of shares shall be determined without deduction of liabilities as envisaged in sub-section (4) of section 101A of the Ordinance.
The person acquiring the shares may seek a certificate of exemption or a reduced rate certificate from the Commissioner holding the jurisdiction where the person considers the transaction of sale of shares is either exempt or subject to a reduced rate of tax under any of the provisions of the Ordinance.
A person disposing of the shares is required within 30 days to furnish to the Commissioner holding jurisdiction over the case, information, or documents in a statement as may be prescribed.
Moreover, a proviso has been inserted in section 37A ousting shares of listed companies not traded on the registered stock exchange and not settled through NCCPL from the ambit of section 37A.
In such cases, provisions of section 37 shall apply with respect to the collection and payment of taxes.
This is done to capture off-market transactions of shares of listed companies that are not traded through registered stock and not settled by NCCPL.
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Posted on: 2023-08-02T12:48:19+05:00
