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Offline Farzooq

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CGT -- Capital Gains Tax
« Reply #-1 on: February 13, 2010, 09:11:48 AM »
Capital gains tax soon on stock market: Tarin  
 
Saturday, February 13, 2010
ISLAMABAD: Pakistan will impose a capital gains tax on stock market transactions in the new financial year beginning on July 1, Finance Minister Shaukat Tarin said on Friday.

Tarin, a respected finance minister who negotiated an International Monetary Fund loan in 2008, also addressed rumours about his resignation, saying he had not resigned nor had he discussed stepping down with anyone.

Speaking at a meeting on developing the private sector, Tarin referred to government efforts to boost revenue. “This year one of the areas which will ... be taxed for sure is capital gains on the stock market,” he said.

Pakistan’s tax-to-gross domestic product ratio of about 9 per cent is one of the lowest in the world and Tarin said the government aimed to raise it to at least 15 per cent in the next three to four years.

He gave no detail about the rate of the proposed tax on the stock market but the main Karachi Stock Exchange has proposed a 5 per cent capital gains tax in the next fiscal year, going up gradually to 10 per cent by 2014/15.

Capital gains tax would only be imposed on stocks which are held for 180 days or less, the KSE said in budget proposals posted on its website on Friday. The KSE also recommended that while introducing capital gains tax, all other taxes on stock market transactions should be abolished.

The imposition of a capital gains tax had been expected for several years, analysts said.

Tarin said this month he expected the fiscal deficit to be 5.3 per cent of gross domestic product or less this fiscal year compared with a target of 4.9 per cent. The economy could grow by more than 4 per cent in the next financial year after expected GDP growth of 3.4 per cent this fiscal year, he said. GDP growth last fiscal year was 2 per cent.
 
« Last Edit: February 01, 2012, 10:04:31 PM by M&M »
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CGT -- Capital Gains Tax
« Reply #-1 on: February 13, 2010, 09:11:48 AM »

Offline Farzooq

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Re: CGT -- Capital Gains Tax
« on: February 13, 2010, 09:13:29 AM »
Gradual implementation of CGT proposed

AHMED MALIK
KARACHI (February 13 2010): The Karachi Stock Exchange (KSE) has proposed to the government to implement capital gain tax, initially at the rate of 5 percent in the next fiscal year, and gradually increase it to 10 percent by 2014-15. In its proposals for the federal budget 2010-11, the KSE has proposed gradual progressive capital gain tax implementation, initially at the rate of 5 percent, and to be elevated to 10 percent.

This schedule would apply to both equity and derivative products, it said. It has been proposed that the CGT should be implemented initially at the rate of 5 percent for the fiscal year 2010-11; 6 percent for 2011-12; 7 percent for 2012-13; 9 percent for 2013-14 and 10 percent for 2014-15.

The KSE has proposed that the capital gains tax introduced must be rational with the competitors for Pakistan to remain an attractive destination for portfolio investment. The holding period for exemption of capital gains shall be increased to 180 days or more for the year 2010-11 and for 2011-12; 270 days or more for 2012-13 and 2013-14 and 360 days or more for the year 2014-15.

Effective from July 1, 2010, capital gain tax for investors should be imposed only where the capital gains fall in the category of short term capital gain (holding period is less than 180 days.) The tax shall be applicable on all equity and derivative products, provided all other under-mentioned taxes currently applied on stock market transactions are removed.

These include withholding tax at 0.01 percent on purchase value of shares traded from members in lieu of their commission, withholding tax at 0.01 percent on sale value of shares traded from members in lieu of their commission, withholding tax at 0.01 percent on sale value of shares traded from members, withholding tax at 10 percent mark-up of COT/CFS from members (CFS & CFS MK-II at present stands discontinued).

Moreover, it is important to note that the rationale for removal of the above-mentioned withholding taxes is clear because of the implementation of federal excise duty (FED) on commission of brokers with effect from July 2009. However, it would not be out of place to mention that earlier the Finance Minister, on July 6, 2009 during a visit to the KSE, had announced that under sub-section (2) of Section 233A, of the Income Tax Ordinance 2001, the applicability of minimum tax would be changed to adjustable tax and under clause (c) of sub section (1) of section 233A of the Income Tax Ordinance 2001, the applicability of withholding tax on sale would be withdrawn/omitted to eliminate double taxation.

It was proposed that the government implement an effective date of July 1, 2010 which imposes a capital gains tax on securities purchased on July 1, 2010 and thereafter. The holding period of inventory (shares) as at June 30, 2010 will be deemed as over 6 months old and hence no capital gains tax will be levied irrespective when such inventory/shares are being disposed/sold. This should be a direct tax with no withholding as per international practice.

It has been proposed that CGT would be applicable only if the holding period is less than 180 days at the time investment is cashed out (redeemed and not reinvested) and the capital gain falls in the category of short term capital gain. It was also proposed that the capital gains and losses for non-residents are to be calculated in terms of the currency in which such investment is made as capital gain for investment in shares by a non-resident in US dollars are to be made in US dollars instead of Pakistani rupee.

It is therefore proposed that a proviso similar to section 48 of the Indian Income Tax Act 1961 be inserted in Section 76 of the Ordinance relating to cost of investment for the purpose of determining of capital gains. It is also suggested that redeemable capital which includes TFCs may be removed from the scope in order to develop the secondary market for these securities. In order to facilitate a speedy corporatisation and demutualisation of the KSE, certain exemptions are required in the Income Tax Ordinance, 2001 as well as Stamp Act.

The KSE focused its tax proposals on the CGT because it is a significant change to the current taxation regime and is committed to working with the government to implement a long term and effective tax policy. The capital gains, except banking companies, have been exempt from taxation and this exemption is due to be withdrawn from tax year 2010 and onwards. With the introduction of capital gains tax, all other taxes and levies related to purchase and disposal of securities would be abolished, with the exception of federal excise duty (FED) on brokerage services.

In view of the possible pressure being created in the market due to the uncertainty of how tax on capital gains will be imposed, KSE management has worked out what it believes will be a fair basis for imposing the tax and would urge the government to announce the proposed structure at the very earliest.
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Offline Farzooq

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Re: CGT -- Capital Gains Tax
« Reply #1 on: February 13, 2010, 09:31:24 AM »
KSE budget proposals seek 5 per cent CGT  
 
Saturday, February 13, 2010
By Salman Siddiqui

KARACHI: In budget proposals for 2010-11 submitted to the ministry of finance, the Karachi Stock Exchange (KSE) has suggested to initially impose five per cent Capital Gains Tax (CGT) on income from sale of shares with effect from July 1, 2010 and increase it to 10 per cent by fiscal year 2014-15.

In consultation with the ministry of finance, the Federal Board of Revenue (FBR) has reportedly decided to levy 10 per cent CGT in one go from July 1, 2010. Equity investors have been enjoying exemption from the CGT since 1974.

The KSE, in its proposals, said that exemption from CGT should be withdrawn from the set date after removing all other taxes being collected at different levels of shares’ sale and purchase.

Investors holding shares for a minimum period of 180 days should remain exempt from paying CGT in the first two fiscal years (from July 1, 2010 to June 30, 2012).

In the second phase, investors should be granted CGT exemption if they hold shares for a minimum period of 270 days in the next two fiscal years (from July 1, 2012 to June 30, 2014). Finally, those investors, who would opt to keep shares for a minimum period of 360 days, should be offered tax exemption from July 1, 2014 and onwards, said the proposals.

But, those investors who would sell shares on profit before the expiry of minimum holding period would be liable to pay Capital Gain Tax (CGT) at that times pre-set rate accordingly. Moreover, investors who would offload holdings in loss should not be taxed, the proposal sought.

“Our analysis found that only two countries in MSCI Frontier Markets and three countries in MSCI Emerging Markets have imposed a capital gains tax. Therefore, as we compete with these countries the capital gains tax introduced must be rational with our competitors for Pakistan to remain an attractive destination for portfolio investment,” proposal made the argument.

Capital gains and losses for non-residents are to be calculated in terms of the currency in which such investment is made. For example, capital gain for investment in shares by a non-resident in US Dollars is to be made in US Dollars instead of Pakistani Rupee. This is an internationally accepted practice as only real income or loss can be taxed, the proposal suggested and added, the implementation of this proposal will help attracting foreign investment into Pakistan, as investment would not be exposed to losses stemming from depreciation of the Pakistani Rupee.
 
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Offline AAB SAIFY

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Re: CGT -- Capital Gains Tax
« Reply #2 on: February 13, 2010, 06:25:14 PM »
Tax tax tax
ab yeh naya drama ,
matlab yeh keh jitna profit ho ga is amount pay 5% tax dena ho ga,
agar 1000 gain howa tu 50 rps tax 950 will be after tax ,
Thats What i understood am i right ,
 
am i right bro ,
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neelo

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Re: CGT -- Capital Gains Tax
« Reply #3 on: February 13, 2010, 06:29:50 PM »
Tax tax tax
ab yeh naya drama ,
matlab yeh keh jitna profit ho ga is amount pay 5% tax dena ho ga,
agar 1000 gain howa tu 50 rps tax 950 will be after tax ,
Thats What i understood am i right ,
 
am i right bro ,


to me 5% means one whole upperlock. :khikhi:

Offline Learner7

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Re: CGT -- Capital Gains Tax
« Reply #4 on: February 13, 2010, 06:32:31 PM »
Parasites just suck the blood and do nothing. :laugh:

Offline Learner7

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Re: CGT -- Capital Gains Tax
« Reply #5 on: February 13, 2010, 06:34:18 PM »

to me 5% means one whole upperlock. :khikhi:


You are somewhat right. ::)

Offline AAB SAIFY

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Re: CGT -- Capital Gains Tax
« Reply #6 on: February 13, 2010, 07:14:12 PM »
Its gain tax which means what ever you gain 5% give to uncle tarin ,
ab jitna per trade profit ho ga is main se 5% - thats what i still understood
pata nahi uncle sahib ko stock Exch
kia narazgee hai ,
9000 pe floor k waqt broker support fund mangtay rahay tu kaha aik rupia nahi don ga , aur ab tax tax ,   :banana:
kia uncle tarin pehlay kse director bhi thay not sure me,
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Offline Farzooq

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Re: CGT -- Capital Gains Tax
« Reply #7 on: February 15, 2010, 11:21:54 AM »
Gradual implementation of CGT proposed by KSE (BR)

The Karachi Stock Exchange (KSE) has proposed to implement capital gain tax in a phased
manner, starting with 5% in FY11 and gradually increasing to 10% by FY15. The minimum holding
period for exemption of capital gains shall also be gradually increased from initial 180 days to 270
days or more in FY13 and 360 days in FY15. The KSE has also proposed to (1) apply CGT only if
the investor does not reinvest the capital gains from short-term investments and (2) calculate the
capital gains in the currency of investment rather than Pak Rupees for FIIs. Effective from 1st July
2010, capital gain tax on short-term investments shall replace all taxes currently applied on stock
market transactions. These include withholding tax at 0.01% on purchase and sale value of shares
traded from members in lieu of their commission, withholding tax at 0.01% on sale value of shares
traded from members and withholding tax at 10% on mark-up of COT/CFS from members.
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Offline Farzooq

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Re: CGT -- Capital Gains Tax
« Reply #8 on: February 20, 2010, 12:23:07 PM »
Stock exchanges: FBR to propose 10 percent CGT from July 1

SOHAIL SARFRAZ
ISLAMABAD (February 20 2010): The Federal Board of Revenue (FBR) will propose 10 percent capital gains tax (CGT) on stock exchanges from July 1, 2010, whereas withholding tax on shares transactions would not be abolished along with imposition of the CGT. Sources told Business Recorder here on Friday that the rate of CGT is much higher in European countries.

In case of India, 10 percent CGT is applicable on stock exchanges. As compared to higher rates applicable in other countries, 10 percent CGT is a reasonable rate, which would be discussed in the meetings with the stock exchanges. However, the withholding tax on all trading transactions made in the stock exchanges would remain intact during the next fiscal year.

The FBR has started consultative meetings with the stock exchanges so that they should know well before time about the imposition of CGT on stock exchanges. At present, exemption of capital gains tax on stock exchanges is available under clause-110 of Part-I of the Second Schedule of the Income Tax Ordinance 2001. Sources said that excise duty in value-added tax (VAT) mode would be abolished under the proposed Federal VAT Act, 2010. The Federal Excise Act would not be abolished from next fiscal year to continue with the excise duty applicable on a few commodities.

The new VAT Act would be discussed with the Parliamentarians in the next meeting of Senate standing committee on finance. President Asif Ali Zardai has also shown interest in briefing on the new VAT law. Once the law would be passed by the Parliament, an in-depth debate would take place among the stakeholders in May-June period.

Sources said that the Expeditious Refund System has to be implemented along with the enforcement of Federal VAT Act. If the system of speedy payment of refund failed, the whole scheme of VAT would be distorted. The whole scheme of VAT depends on prompt payment of refunds under the new scheme. There is a strong possibility of not taking additional revenue generation measures in the fourth quarter (April-June) 2009-10, keeping in view the current pace of revenue collection.

The revenue collection in the third quarter of current fiscal year would be strictly monitored before taking any decision for taking additional measures. The growth in December 2009 increased from 9 percent to 20 percent. Moreover, large-scale manufacturing is showing growth and along with sales tax and income tax registration is also improving. The audit of associations of persons (AOPs) and corporate sector has been started and recovery of outstanding arrears would also improve revenue collection.

The enforcement and administrative actions would also be instrumental in increasing collection. The increasing prices of POL products would also increase revenue collection. "We have the month of March 2010 to analyse position of revenue collection", sources added.

During the recent meeting in Dubai, the International Monetary Fund (IMF) and FBR agreed on the revenue collection target of Rs 1380 billion for 2009-10. IMF has been further informed that the total number of business returns had been substantially increased following extension in date of filing of returns. Sources said that the FBR has discovered 58,000 properties in Karachi where owners are earning huge amount of rental income, but are not filing income tax returns.

On the basis of information available from Foreign Office, around 70 houses have been rented to foreign missions and embassies in Karachi, but the owners are neither paying any taxes nor filing returns. When the FBR received data, the tax managers were shocked that owners of such embassies and foreign missions, earning rent in US dollars, are the most influential and powerful individuals of Pakistan.

Without disclosing names, sources said that most of owners of property rented to foreign missions are most influential people of the country. Some of the names are so prominent that if their names are disclose, people would be surprised that such famous people are not filing their income tax returns.

The FBR will also issue notices to the owners of property earning rental income in US dollars from embassies in capital, but failed to file returns. All commercial and industrial consumers of electricity would be asked to submit their status whether they are registered or not. Around 2.7 million commercial connections of electricity have been obtained by persons engaged in business activities like manufacturing, service providers like clinics/private hospitals, showrooms and many other professionals engaged in business activities.

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Offline ::WASIF::

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Re: CGT -- Capital Gains Tax
« Reply #9 on: February 20, 2010, 12:33:59 PM »
10 % kis per hogaa Sale Value per Buy value per ya phir Net Capital Gain per against any Scrip or what so ever. please explain me anyone
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Offline Farzooq

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Re: CGT -- Capital Gains Tax
« Reply #10 on: February 20, 2010, 12:46:42 PM »
10 % kis per hogaa Sale Value per Buy value per ya phir Net Capital Gain per against any Scrip or what so ever. please explain me anyone

its a tax on capital gain (profits) only
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me

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Re: CGT -- Capital Gains Tax
« Reply #11 on: February 20, 2010, 01:03:46 PM »
10 % kis per hogaa Sale Value per Buy value per ya phir Net Capital Gain per against any Scrip or what so ever. please explain me anyone

Capital Gain par

Offline sumbul

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Re: CGT -- Capital Gains Tax
« Reply #12 on: February 20, 2010, 01:35:34 PM »
Stock exchanges: FBR to propose 10 percent CGT from July 1

SOHAIL SARFRAZ
ISLAMABAD (February 20 2010): The Federal Board of Revenue (FBR) will propose 10 percent capital gains tax (CGT) on stock exchanges from July 1, 2010, whereas withholding tax on shares transactions would not be abolished along with imposition of the CGT. Sources told Business Recorder here on Friday that the rate of CGT is much higher in European countries.

In case of India, 10 percent CGT is applicable on stock exchanges. As compared to higher rates applicable in other countries, 10 percent CGT is a reasonable rate, which would be discussed in the meetings with the stock exchanges. However, the withholding tax on all trading transactions made in the stock exchanges would remain intact during the next fiscal year.

The FBR has started consultative meetings with the stock exchanges so that they should know well before time about the imposition of CGT on stock exchanges. At present, exemption of capital gains tax on stock exchanges is available under clause-110 of Part-I of the Second Schedule of the Income Tax Ordinance 2001. Sources said that excise duty in value-added tax (VAT) mode would be abolished under the proposed Federal VAT Act, 2010. The Federal Excise Act would not be abolished from next fiscal year to continue with the excise duty applicable on a few commodities.

The new VAT Act would be discussed with the Parliamentarians in the next meeting of Senate standing committee on finance. President Asif Ali Zardai has also shown interest in briefing on the new VAT law. Once the law would be passed by the Parliament, an in-depth debate would take place among the stakeholders in May-June period.

Sources said that the Expeditious Refund System has to be implemented along with the enforcement of Federal VAT Act. If the system of speedy payment of refund failed, the whole scheme of VAT would be distorted. The whole scheme of VAT depends on prompt payment of refunds under the new scheme. There is a strong possibility of not taking additional revenue generation measures in the fourth quarter (April-June) 2009-10, keeping in view the current pace of revenue collection.

The revenue collection in the third quarter of current fiscal year would be strictly monitored before taking any decision for taking additional measures. The growth in December 2009 increased from 9 percent to 20 percent. Moreover, large-scale manufacturing is showing growth and along with sales tax and income tax registration is also improving. The audit of associations of persons (AOPs) and corporate sector has been started and recovery of outstanding arrears would also improve revenue collection.

The enforcement and administrative actions would also be instrumental in increasing collection. The increasing prices of POL products would also increase revenue collection. "We have the month of March 2010 to analyse position of revenue collection", sources added.

During the recent meeting in Dubai, the International Monetary Fund (IMF) and FBR agreed on the revenue collection target of Rs 1380 billion for 2009-10. IMF has been further informed that the total number of business returns had been substantially increased following extension in date of filing of returns. Sources said that the FBR has discovered 58,000 properties in Karachi where owners are earning huge amount of rental income, but are not filing income tax returns.

On the basis of information available from Foreign Office, around 70 houses have been rented to foreign missions and embassies in Karachi, but the owners are neither paying any taxes nor filing returns. When the FBR received data, the tax managers were shocked that owners of such embassies and foreign missions, earning rent in US dollars, are the most influential and powerful individuals of Pakistan.

Without disclosing names, sources said that most of owners of property rented to foreign missions are most influential people of the country. Some of the names are so prominent that if their names are disclose, people would be surprised that such famous people are not filing their income tax returns.

The FBR will also issue notices to the owners of property earning rental income in US dollars from embassies in capital, but failed to file returns. All commercial and industrial consumers of electricity would be asked to submit their status whether they are registered or not. Around 2.7 million commercial connections of electricity have been obtained by persons engaged in business activities like manufacturing, service providers like clinics/private hospitals, showrooms and many other professionals engaged in business activities.



VERY BAD NEWS. PRESSURE ON MONDAY  :brickwall:  :down:

Offline ::WASIF::

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Re: CGT -- Capital Gains Tax
« Reply #13 on: February 20, 2010, 02:00:04 PM »
10 % kis per hogaa Sale Value per Buy value per ya phir Net Capital Gain per against any Scrip or what so ever. please explain me anyone

its a tax on capital gain (profits) only


ager loss hogaa tou kuch nahi hogaaa
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Offline ::WASIF::

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Re: CGT -- Capital Gains Tax
« Reply #14 on: February 20, 2010, 02:01:16 PM »
10% is very high rate its really a very very bad news
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Offline AAB SAIFY

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Re: CGT -- Capital Gains Tax
« Reply #15 on: February 20, 2010, 03:33:48 PM »
10 % kis per hogaa Sale Value per Buy value per ya phir Net Capital Gain per against any Scrip or what so ever. please explain me anyone

its a tax on capital gain (profits) only


ager loss hogaa tou kuch nahi hogaaa
Abhi tu nahi hai magar tarin sb is ke liye
plan bana rahay hon gay keh woh bhi
kisi tarah awam se loss main bhi clt
capital loss tax wasool kia jaye.
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Offline Learner7

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Re: CGT -- Capital Gains Tax
« Reply #16 on: February 21, 2010, 07:02:11 PM »
Taxing stocks

2/21/2010

Despite many strong rallies at Karachi Stock Exchange (KSE), over the last five months, 100-Index could not breach the 10,000 level. On the weekend the market once again closed at 9,900 mark raising hopes for a breakthrough but reports regarding imposition of capital gains tax (CGT) published on Saturday have once again wet-blanketed the expectations.

Many analysts fear substantial erosion in the key index next week if government does not assure investors that this proposal is not under consideration.

In fact it were brokers who themselves graciously agreed to pay 5 per cent CGT which gave  leverage to tax collectors bent on imposing 10 per cent CGT. They say that with bears in the house brokers should have convinced the government to steer clear of such adventurous moves. In fact they should have asked the government to bring down corporate tax rate and also abolish withholding tax (WHT) applicable on dividend being paid to the shareholders.
It is on record that public limited companies and their employees make the highest contribution to the national exchequer in the shape of import duty, sales tax/excise duty, income tax and WHT. The government has been milking this cow for decades and time for a payback has come.

The talk about the imposition of CGT has become a yearly pop-up, especially when tax collectors try to twist brokers' arms for some new taxes or higher rate of existing taxes. Ironically, brokers are becoming part of this coercive campaign because the money does not slip from their pockets; they act as collection agents at the best.
Tax collectors are citing example of India where 10 per cent CGT is levied to support their argument. This reference can only be termed bad because they completely ignore Dollar-Indian Rupee parity, prices of energy products etc. Indian government follows incentive laden investment policy and businessmen are given the status of commercially important persons (CIPs) whereas tax collectors never miss a chance to malign businessmen and often call them evaders.

It is the government that comes up with 'money whitening campaigns' which encourage businessmen evade tax. However, no one can deny that none can evade tax without the connivance of collectors. One can also go to the extent of saying that every businessman makes some contribution towards the national exchequer, how paltry it may be, but do the politicians and bureaucrats pay any tax on the ill-gotten money?

Offline Big Broker

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Re: CGT -- Capital Gains Tax
« Reply #17 on: February 21, 2010, 08:21:25 PM »
10 % kis per hogaa Sale Value per Buy value per ya phir Net Capital Gain per against any Scrip or what so ever. please explain me anyone

Capital Gain par

Loss per refund milee ga ? :beatingheart:

what about capital loss ?
Warning: Confusing ones self with technical analysis may be hazardous for financial health.

Offline Farzooq

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Re: CGT -- Capital Gains Tax
« Reply #18 on: February 22, 2010, 12:02:04 PM »
kse fbr meeting today on cgtax
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