A senior official of Federal Board of Revenue (FBR) visited National Clearing Company of Pakistan Limited (NCCPL) to study the company’s system and mechanism being deployed for the computation and deduction of Capital Gains Tax (CGT). The visit has been a consequent step to the finance minister’s approval to the SECP proposal on revamping CGT that was submitted to FBR last month. In terms of the proposal to provide ease of calculation and documentation to individual investors, NCCPL will act as a withholding agent to deduct and deposit CGT from investors’ transactions. NCCPL, SECP, FBR and other relevant capital market service providers are working out the exact details so that necessary legal and operational changes are made by the target date of April 1, 2012.
NCCPL during its presentation, briefed FBR on its operational and legal infrastructure and capabilities to undertake the envisaged role. NCCPL’s IT-intensive set-up will allow system based computation of CGT without human involvement. Under the proposed mechanism, NCCPL will compute and deduct CGT for every investor by constructing an inventory portfolio based on its unique identification number. Both market-based transactions executed through stock exchanges and in the Central Depository System will be used for computation of CGT liability in accordance with the Income Tax Ordinance and Rules. It is expected that during the coming week, NCCPL will forward its proposal to FBR in relation to the required regulatory amendments to give effect to the overall CGT scheme.
