NCCPL enforces new CGT regime

KARACHI: National Clearing Company of Pakistan has enforced capital gains tax (CGT) regime in the range of 7.5 and 20 percent on shares with effect from July 1, in line with the amendment into the Finance Act 2017, a notice said on Wednesday. 

The Finance Bill 2017/18 proposed fixed rate of 15 percent for filer and 20 percent for non-filer irrespective of holding period of securities. However, the government reconsidered the proposal and restored the slab-mechanism in the Finance Act 2017.

The difference in tax rate for filer and non-filer still exists. The notice said for tax year 2017, CGT will be 15 percent for filer and 18 percent for non-filer when share holding period is less than a year. For tax year 2018, CGT will be 15 percent for filer and 18 percent for non-filer on securities acquired before July 1, 2016, while CGT will be 15 percent for filer and 20 percent for non-filer on shares acquired on or after July 1, 2016 for less than a year, it added.

In case of securities held between 12 to 24 months, capital gains of filer will be taxed at 12.5 percent, and non-filer at 16 percent for tax year 2017. For tax year 2018, CGT rate will be 12.5 percent for filer and 16 percent for non-filer on securities acquired before July 1, 2016. CGT will be 15 percent for filer and 20 percent for non-filer on equities bought on or after July 1, 2016 and held for more than a year but less than two years.

If holding period of shares is two years or more, but shares were acquired on or after July 1, 2017, capital gains of filer will be taxed at 7.5 percent and 11 percent for non-filer in tax year 2017 and 2018. However, securities acquired on or after July 1, 2016 will invite CGT of 15 percent for filer and 20 percent for non-filer.  There will be no capital gains tax for all classes of investors on securities acquired before July 1, 2013. Furthermore, tax rate of cash settled derivatives traded on Pakistan Stock Exchange for the tax years 2018 to 2020 will be five percent, according to the notice.