KARACHI: The Finance Bill 2017 proposed capital gain tax rate at 15 percent irrespective of holding period for filers of income tax returns and 20 percent for non-filers. However, securities purchased before July 01, 2013 are exempt from deduction of capital gain tax.
Tax analysts at Deloitte Yousuf Adil Chartered Accountants said that the Finance Bill is silent, however, it seems that tax rates for non-filers will only be applicable at collection stage and taxpayers will be entitled to claim the excess tax collected as refund while filing the return of income.
Further, as a consequence of substitution of Division VII, capital gains on disposal of debt securities by the companies, which is currently taxed at corporate tax rate, is proposed to be taxed as per the above table.
Further, a mutual fund or collective investment scheme or REIT are no more required to deduct capital gain tax on redemption of securities. Gain on investment in such securities will be computed and determined under Eight Schedule and tax thereon shall be collected and deposited by NCCPL.
Through the Finance Act 2016, Division VII was also substituted in same way as it has been substituted through the Finance Bill; however, it was clarified through circular explaining Finance Act, 2016 that no change had been made to the provisos to the Division VII. Considering last year’s pattern of the amendments, we expect that this anomaly may be corrected later either through the Finance Act or through notification.
