COMPUTATION, DETERMINATION, COLLECTION & DEPOSIT OF CAPITAL GAIN TAX ("CGT")

National Clearing Company of Pakistan Limited (“NCCPL”), an infrastructure institution of Pakistan’s capital market, has been mandated by the Federal Board of Revenue (“FBR”) to compute, determine, collect and deposit CGT on disposal of listed securities. NCCPL has developed an automated CGT system to discharge its role in the CGT regime implemented under Section 37A of the Income Tax Ordinance, 2001.

NCCPL’s CGT system not only facilitate investors in discharging their CGT obligation and tax assessment but also serves FBR by providing a uniform CGT computation and centralized collection mechanism. The CGT system has continuously enhanced tax collection and has resulted in documentation of economic activity in the capital markets.

Salient Features

1. All trades/transactions executed on Securities Exchange trading platforms and movement of securities through free-delivery in Central Depositary System (“CDS”) is covered under CGT Regime.
2. All capital gains arising on redemption of units of open ended mutual funds and on trading of future commodity contacts at Pakistan Mercantile Exchange (“PMEX”) are included in CGT Regime of NCCPL, from July 1, 2016.
3. Loss sustained on disposal of listed securities in tax year 2019 and onwards that has not been set off against the gain of the person from disposal of securities chargeable to tax under section 37A shall be carried forward to the following tax year and set off only against the gain of the person from disposal of securities chargeable to tax under section 37A, 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 adjustment of prior year’s capital losses is subject to availability of the tax payers’ name in the Active Tax Payers List provided by FBR to NCCPL for the purpose of allowing such adjustments.

4. NCCPL collects CGT on monthly basis on the basis of net capital gain of tax payers in CGT regime through respective securities brokers which is deposited in the designated account opened and operated exclusively for this purpose.
5. NCCPL also refunds excess or entire amount of CGT collected on monthly basis to respective securities brokers if the tax payer sustains losses resulting in reducing capital gain or when net loss situation arises during a tax year.
6. NCCPL submits quarterly return to FBR in the prescribed form which contains details of capital gain, CGT computation and collection in respect of all tax payers in the CGT regime.
7. NCCPL issues Annual Certificate of Capital Gains to tax payers which is considered conclusive evidence of capital gain and tax thereon.

CGT rates on capital gains arising on disposal of listed securities traded at Pakistan Stock Exchange, redemption of units of open ended mutual funds and trading of future commodity contracts at PMEX are as under: The rate of 0% tax shall be charged on capital gain arising on disposal where the securities are acquired before the first day of July, 2013. Further, the applicable capital gain tax rates effective from July 1, 2023, are reproduced below for ready reference:

Except for PMEX and MUFAP:

1. The reduced rates of tax on capital gain arising on disposal shall apply where the securities are acquired on or after the first day of July, 2022; and
2. The rate of 12.5% tax shall be charged on capital gain arising on disposal where the securities are acquired on or after the first day of July, 2013 but on or before the 30th day of June, 2022..

1. Super Tax on Capital Gains (For All Markets)

S. No	Income under section 4C	For tax year 2024
1	Where income does not exceed Rs. 150 million	0% of the income
2	Where income exceeds Rs. 150 million but does not exceed Rs. 200 million	1% of the income
3	Where income exceeds Rs. 200 million but does not exceed Rs. 250 million	2% of the income
4	Where income exceeds Rs. 250 million but does not exceed Rs. 300 million	3% of the income
5	Where income exceeds Rs. 300 million but does not exceed Rs. 350 million	4% of the income
6	Where income exceeds Rs. 350 million but does not exceed Rs. 400 million	6% of the income
7	Where income exceeds Rs. 400 million but does not exceed Rs. 500 million	8% of the income
8	Where income exceeds Rs. 500 million	10% of the income