https://www.nccpl.com.pk/en/products-services/products-services-1/capital-gain-tax-cgtCOMPUTATION, 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
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.
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.
First In First Out (FIFO) Inventory Accounting Method is being used to determine CGT.
CGT is determined as per below mentioned tax rates:
A. CGT rates on capital gains arising on Disposal of Securities listed at Pakistan Stock Exchange (“PSX”) and on trading of future commodity contracts at PMEX shall be as under:
S. No.
Holding Period
Tax Year 2017
Tax Year 2018
Securities Acquired before July 1, 2016
Securities Acquired before July 1, 2016
Securities Acquired on or after July 1, 2016
Securities Acquired on or after July 1, 2016
Filer
Non-Filer
Filer
Non-Filer
Filer
Non-Filer
Tax Rate
Tax Rate
Tax Rate
Tax Rate
Tax Rate
Tax Rate
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
1.
Where holding period of a security is less than twelve months
15%
18%
15%
18%
15%
20%
2.
Where holding period of a security is twelve months or more but less twenty-four months
12.50%
16%
12.50%
16%
3.
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%
11%
7.50%
11%
4.
Where the security was acquired before 1st July, 2013
0%
0%
0%
0%
0%
0%
5.
Future commodity contracts entered into by the members of PMEX
5%
5%
Furthermore, tax rate of cash settled derivates traded on PSX for the tax years 2018 to 2020 shall be 5%.
Provided that the rate for companies shall be as specified in Division II of Part I of First Schedule, in respective of debt securities;
B. CGT Rate on capital gains arising on Redemption of units of open ended mutual funds shall be as under
Category
Rate
Individual and association of persons
10% for stock funds
10% for other funds
Company
10% for stock funds
25% for other funds
Provided further that in case of a stock fund if dividend receipts of the fund are less than capital gains, the rate of tax deduction shall be 12.5%.
Provided further that no capital gains tax shall be deducted, if the holding period of the security is more than four years.
Capital Loss in a Financial Year is set off against Capital Gain of that Financial Year.
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.
