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Capital Gain Tax (CGT)

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

First time in the history of Taxation System of Pakistan, National clearing company of Pakistan Limited (“NCCPL”) being an independent organization, has been assigned the responsibility to Compute, Determine, Collect and Deposit CGT to national ex-chequer on behalf of the capital market investors. Centralized CGT System provides ease of calculation and centralized one-window solution for the determination of CGT.

Salient Features

  1. All trades/transactions executed on the 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. First In First Out (FIFO) Inventory Accounting Method is being used to determine CGT.
  4. CGT is determined as per below mentioned tax rates:

CGT rates on capital gains arising on Disposal of Securities listed at Pakistan Stock Exchange (“PSX”), on arising on Redemption of units of open ended mutual funds and on trading of future commodity contracts at PMEX shall be as under:

Tenth Schedule:

  • 100% increased CGT rates will be applied to all the categories of investors not appearing in Active Taxpayer List (ATL) provided by FBR.
MarketConditionsYear 2019-20 CGT Rates
Investors appearing in ATLInvestors not appearing in ATL
PSX Where the security was acquired before 1st July, 2013 0.00% 0.00%
Securities Acquired before July 1, 2016. Where holding period of a security is twenty-four months or more but the security was acquired on or after 1st July, 2013 7.50% 15.00%
Securities Acquired on or after July 1, 2016 15.00% 30.00%
Cash settled derivatives traded on Stock Exchange 5.00% 10.00%
MUFAP Where the holding period of securities more than Four years 0.00% 0.00%
Stock Funds: For individuals and corporate if Dividend receipts of the fund are more than capital gains 10.00% 20.00%
Stock Funds: For individuals and corporate if dividend receipts of the fund are less than capital gains 12.50% 25.00%
Other than Stock Funds. For individuals 10.00% 20.00%
Other than Stock Funds. For Corporate 25.00% 50.00%
PMEX Future Commodity Contracts executed at Pakistan Mercantile Exchange 5.00% 10.00%

Furthermore, tax rate of cash settled derivatives traded on PSX for the tax years 2018 to 2020 shall be 5% whose appearing in ATL and 10% not appearing in ATL.

Provided that the rate for companies shall be as specified in Division II of Part I of First Schedule, in respective of debt securities;

Section 37A:

  • 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.

  1. Annual Certificate Showing computation of Capital Gains and Tax thereon, if any, to each Investor at the end of the Financial Year is issued by NCCPL.


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