NCCPL notifies additional capital gains tax on non-filers

KARACHI: The National Clearing Company of Pakistan Limited (NCCPL) on Wednesday notified additional capital gains tax on investors who don’t appear in active taxpayers list (ATL), in line with an amendment into a tax law introduced earlier this year.

The NCCPL said investors not appearing in ATL for 2019/20 need to pay 100 percent more capital gains tax (CGT than those who are included in ATL.

In March, an amendment into the Income Tax Ordinance, 2001 was introduced vide Finance Supplementary (Second Amendment) Act 2019 and that enforced revised rates for filers and non-filers. NCCPL is the authorised withholding agent that deducts CGT from investors of the Pakistan Stock Exchange (PSX) on behalf of the Federal Board of Revenue (FBR).

Zero percent CGT would be applicable on securities acquired before July 1, 2013. CGT rate will be 7.5 percent for ATL investors and 15 percent for non-ATL investors on securities acquired before July 1, 2016, where holding period of a share is a year or more but the share was acquired on or after 1 July, 2013.

Tax rate will be 15 percent for ATL investors and 30 percent for non-ATL investors on securities acquired on or after July 1, 2016. CGT rate will be 5 percent and 10 percent for cash settled derivatives traded on the PSX.

Zero percent CGT will be applicable for all investors on mutual fund units where the holding period of securities is more than four years. CGT of 10 percent for ATL investors and 20 percent for non-ATL investors will be applicable on stock funds for individuals and corporate sector if dividend receipts of the fund are more than capital gains. CGTs of 12.5 percent and 25 percent will be applicable on stock funds for individuals and corporate if dividend receipts of the fund are less than capital gains.

Likewise, CGT of 10 percent and 20 percent will be collected from individual investors on funds other than stock funds. CGT of 25 percent and 50 percent will be collected from corporate investors on funds other than stock funds.

Tax rates will be 5 percent and 10 percent on future commodity contracts executed at the Pakistan Mercantile Exchange.

Loss sustained on disposal of listed securities in the tax year 2019 and onwards would be carried forward to the following tax year and set off only against the gain of the person from disposal of securities, “but no such loss shall be carried forward to more than three tax years immediately succeeding the tax year for which the loss was first computed”.

The Securities and Exchange Commission of Pakistan (SECP) has already made it mandatory for companies to submit certificate of income tax returns.

Companies are required to file compliance certificate with the registrar in a prescribed format with respect to its status of compliance.

Presently, the SECP has 104,030 registered companies. However, the compliance level in return filings by the companies is very low.

“Any contravention of the requirements would be an offence and liable to penalty,” the SECP said in a statement.