CGT collection from share transactions down 52pc

KARACHI: The collection of capital gains tax (CGT) from capital market has declined by 52 percent during first 11 months of the outgoing fiscal year owing to volatile trading at Pakistan Stock Exchange (PSX), sources said on Wednesday.

An amount of Rs6.2 billion was collected in CGT during July–May 2017-18, compared to Rs12.76 billion collected in the corresponding period of the last year.

An official at Federal Board of Revenue (FBR) said the National Clearing Company of Pakistan Limited (NCCPL) collects all taxes from activities from sale and purchase of shares.

Under Section 233A of Income Tax Ordinance, 2001 the NCCPL is responsible to collect advance tax from the members of stock exchange, margin financiers, trading financiers and lenders, in respect of margin financing in share business or providing of any margin financing, margin trading or securities lending under Securities (Leveraged Markets and Pledging) Rules, 2011 in share business.

The official source further said the volatile situation in the stock market resulted in a massive decline in revenue collection.

During the fiscal year 2017/2018 the stock market remained volatile due to political uncertainties, court orders in Panama Leaks and charges framed against former finance minister Ishaq Dar.

The KSE-100 index hit the lowest at 37,919 points on December 19, 2017 after reaching the highest level of 52,876 on May 24, 2017. However, in the current fiscal year, the market has touched the highest level at 46,827 points so far. The source said the collection of capital gains tax was much higher than the recorded transactions of sales and shares.

“The tax authorities have started scrutiny of records to identify the massive decline in revenue collection from equity market,” the official said.

In this regard the FBR will conduct periodical audit of share transactions that were provided by NCCPL and Central Depository Company (CDC).