KARACHI: Stockbrokers are required to pay advance tax on shares’ trading for another month as the law exempting the levy was ratified a little late, sources said on Tuesday.
Sources in the Federal Board of Revenue (FBR) said the brokers have to pay the tax for one more month due to delay in approval of the finance bill.
In January, the government brought forward Finance Supplementary (Second Amendment) Bill 2018 and announced that the advance tax on sale and purchase of shares would not be collected from February 1 under the law.
The national assembly, however, made the bill into law in March after heated debate from the treasury and opposition benches.
The approved bill mentioned that the stockbrokers don’t have
to pay advance tax on sales and purchase of shares from March 1.
Tax experts said stock brokers would now be liable to pay withholding tax on brokerage and commission on whole transaction value under the amendment.
Tax deduction under brokerage and commission income will be final tax.
The stock exchange on behalf of the FBR was collecting advance income tax of 0.02 percent on
sale or purchase of shares from stock brokers before the amendment.
The FBR collected Rs716.76 million in the first seven months of the current fiscal year of 2018/19 under the head compared with Rs830.54 million in the corresponding period a year earlier, showing a 13.7 percent decline.
The demand to abolish the advance tax was raised in December last year the stock exchange was battered by heavy selling.
Pakistan Stock Exchange said such taxes are impediments in attracting investment into equity market.
The stock market was the worst performer in 2018. The foreign investors approximately offloaded $500 million worth of share during the year.
The benchmark KSE-100 index started at 40,471 points, and lost more than 2,000 points. Moreover, share prices of different companies declined more than Rs700 billion.
The government allowed carry-forward of losses for three years considering the dismal performance of the equity market and to boost investors’ confidence.
The national assembly, however, approved the law under which losses sustained on disposal of securities in 2019 could be carried forward next year, but no
such loss could be carried forward to more than three tax years immediately succeeding the tax year for which the loss was first computed.
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