Rise in CGT rate on cards

ISLAMABAD: The FBR is considering increase in rate of Capital Gains Tax (CGT) in the upcoming Finance Bill 2015-16, The News has learnt.
The tax rate on securities in case of more than 6 months is proposed to be increased from 10 to 12.5 percent while on securities more than 12 months the rate of CGT will be jacked up to 15 percent from existing 12.5 percent.
Prior to July 1, 2010, the capital gain on disposal of securities was fully exempt from tax and after extensive deliberations between the government and the capital market stakeholders, it was agreed that holding periods would be bifurcated into three tires.
The stock exchanges, on other hand, recommended the government to reduce CGT in the next budget. They had proposed revision in CGT on disposal of securities at the stock exchanges in the next Finance Bill 2015-16.
They asked the government to abolish 10 percent CGT where holding period of a security is more than 12 months, but less than 24 months (tax year 2015). In its budget proposals, the stock exchanges proposed changes in CGT on disposal of securities under section 37A of the Income Tax Ordinance 2001.
It was recommended that where holding period of a security is less than six months, (tax year 2015), existing tax rate is 12.5 percent and proposed tax rate is 12.5 percent; where holding period of a security is more than six months but less than twelve months, (tax year 2015), existing tax rate is 12.5 percent and proposed tax rate is 10 percent; where holding period of a security is more than twelve months but less than twenty four months, (tax year 2015), existing tax rate is 10 percent and proposed tax rate is zero percent and where holding period of a security is more than twenty four months or more, (tax year 2015), existing tax rate is zero percent and proposed tax rate is also zero percent.
Meanwhile, a high-level meeting chaired by Finance Minister Senator Ishaq Dar here on Wednesday reviewed performance of the Committee established in last fiscal year on regularisation of concessionary regime by the FBR.
The Committee also had detailed discussion on proposed measures regarding second phase of plan for regularisation of concessions and exemptions (SROs) during the fiscal year 2015-16. The Minister was informed that in the first phase of the plan initiated in fiscal year 2013-14 concessions worth Rs105 billion were withdrawn. Regularisation in the second phase would also similarly benefit the national exchequer.
The Minister called upon members of the Committee to take up work on withdrawal and regularisation of SROs with due diligence and care, keeping in view the government’s objective to eliminate culture of extending favours to the privileged few.
The Minister appreciated the output of the committee during the first phase. He said for the second phase too, the same committee would continue to function as it had produced positive results. He gave instructions to members of the committee to finalize their proposals on second phase of withdrawal of concessions by Thursday.FBR Chairman Tariq Bajwa, Advisor Finance Division, Rana Assad Amin and other senior officials of the Ministry of Finance and FBR attended the meeting.