NCCPL implements CGT system under regulatory framework

February 11, 2025 (MLN): The National Clearing Company of Pakistan Limited (NCCPL), entrusted under the ordinance with computing, determining, collecting, and paying capital gains tax to the government treasury, has established a Capital Gains Tax System (CGT) under the NCCPL Regulations.

This tax arises from the disposal of listed securities transactions, as provided under the ordinance and the related rules, according to the NCCPL report titled "NCCPL Regulations pertaining to CGT."

Furthermore, the company has formulated and notified the NCCPL Regulations pertaining to the CGT System for the computation, determination, and collection of CGT, informing all its clearing members, asset management companies, and PMEX.

The NCCPL Regulations 2003 permit the company to make amendments, including additions or deletions, to such regulations.

The Memorandum of Association of the company allows NCCPL to create new, amended, or additional regulations.

The company, through its CGT System, shall compute and determine capital gain or loss on market-based and non-market-based trades/transactions of listed securities, futures, and derivative products/contracts, as well as units of funds or schemes.

This computation shall be carried out in accordance with Section 37(A) read with Section 100(B) of the ordinance and the applicable rules.

The company shall compute and determine capital gains and losses on the disposal of listed securities, futures, derivative products/contracts, and units of funds or schemes.

It shall also collect tax, if applicable, from investors or any persons involved in investing activities in these instruments on behalf of the FBR.

However, this excludes certain cases, such as any eligible person or investor who opts out irrevocably from the provisions relating to capital gain tax in accordance with Rule (5) of the schedule and submits an undertaking to the Company in the prescribed form.

It also excludes entities mentioned in clause 47B of Part IV of the 2nd schedule to the ordinance.

The Capital Gain Tax computed, determined, and collected in accordance with Regulations 28.2.1, shall be deposited by the company on behalf of investor(s) in the manner prescribed in clause 4 of the eight schedules of the Ordinance.

For the performance of the functions entrusted to the company by the FBR in terms of the ordinance and the CGT Rules, the company shall obtain the requisite information from Exchanges, CDC, asset management companies, and PMEX.

The information shall be acquired as per the agreed transmission/communication mechanism.

Additionally, the company may obtain information from any other entity as required from time to time.

The company, through its CGT system, shall compute and determine capital gain or loss on trades or transactions of listed securities, futures, and derivative products or contracts.

It will also calculate gains or losses on units of funds or schemes.

The data for these calculations will be reported to, provided by, or extracted from the systems or procedures in place with the company, exchange, CDC, asset management companies, and PMEX.

Accordingly, tax thereon shall be collected and deposited in accordance with the ordinance and CGT Rules made there under.

The amount of tax on capital gains from clients of the clearing member, unitholders of funds or schemes, and members of PMEX shall be collected by the company from or through the respective clearing member, asset management company, or PMEX.

For the collection of tax on capital gains arising from the disposal of listed securities, futures, and derivative products/contracts listed at the Exchange, the company shall provide an exclusive set of collection information to the respective settling banks of clearing members.

This information shall be provided by the 7th settlement date of each month through NCSS pay and collect.

The amount of tax determined will be for the previous month or months.

The 7th Settlement Date shall be considered from the date on which the net CGT amount for the previous month or months has been computed in the CGT system.

Additionally, client/investor level reports of CGT must have been made available to clearing members.

The tax on capital gains arising from the redemption of units of funds or schemes shall be deposited by asset management companies within 10 working days of the month-end as per the Rules of company.

Similarly, the tax on capital gains from trading commodity futures and derivative products/contracts at PMEX shall be deposited by PMEX within the same timeframe.

The company, under the ordinance, has been entrusted with the function of computing, determining, collecting, and paying CGT into the government treasury.

This applies to the disposal of listed securities' transactions as provided under the ordinance and the CGT rules made thereunder.

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