Annual collection of capital gain tax declines by 26pc during FY2021

ISLAMABAD: The annual collection of capital gain tax (CGT) from the disposal of securities fell by 26 per cent during fiscal year 2020/2021.

The official data revealed that the Federal Board of Revenue (FBR) collected Rs1.925 billion as CGT during the fiscal year 2020/2021 as compared with Rs2.595 billion in the preceding year.

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The FBR collects adjustable advance income tax under Section 147 (5B) of Income Tax Ordinance, 2001 from sale of securities.

The rate of advance income tax on capital gain is:

1. Where the holding period of a security is less than six months: the tax rate shall be two per cent of the capital gains derived during the quarter.
2. Where the holding period of a security is more than six months but less than twelve months: the tax rate shall be 1.5 per cent of the capital gains derived during the quarter.

Provided that such advance tax shall be payable to the Commissioner within a period of twenty-one days after the close of each quarter:

Provided further that the provisions of this sub-section shall not be applicable to individual investors, according to the Income Tax Ordinance, 2001.