The federal government, through a presidential ordinance issued on Tuesday, gave a legal cover to the federal finance mister’s assurances to the stocks investors that they would not be asked to declare the source of their invested amount for next two years.
“Having not read the ordinance yet, we expect that the Ordinance incorporates all of the finance minister’s assurances to us,” said Naeem Rafi, former KSE chairman and CEO of Rafi Securities. The stock broker said on Wednesday the investors at the KSE were panicked by the apprehension that the Ordinance would not carry the exemption clause for the investors. The Finance (Amendment) Ordinance 2012, which was placed on the website of the Karachi Stock Exchange on Wednesday, exempts the investors from declaring the “nature and source” of the amount invested.
The investors would however have to file a statement of investment with the commissioner along with the return of income of and wealth statement for the tax year 2012 within the prescribed due date.
“And that the amount invested remains invested for a period of 45 days up to June 30, 2012,” the Ordinance reads. Also, it says the enquiries about the nature and sources would not be made on the investments made for a period of 120 days.
A special provision, Section 100B, has been inducted in the Ordinance that says the CGT on disposal of listed securities and tax thereon shall be computed, determined, collected and deposited in accordance wit the rules laid down in the Eight Schedule. Section 100B of the Eight Schedule deals with the manner and basis of the computation of capital gains and tax thereon.
Section 1 of the Schedule says the NCPPL should collect and deposit the CGT on behalf of the taxpayer in the manner prescribed. For the purpose, the NCCPL should develop an automated system.
The NCCPL would be issuing an annual certificate to the taxpayers on the prescribed form in respect of capital gains subject to tax under this schedule for a financial year.
Provided that on the request of a taxpayer or if required by the commissioner, the NCCPL shall issue a certificate for a shorter period within a fiscal year. The taxpayers would be bound to file the certificate along with the return of income and such certificate shall be conclusive evidences in respect of their income.
The NCCPL would be required to furnish to the Federal Board of Revenue within 30 days of the end of each quarter a statement of capital gains and tax computed thereon in that quarter in the prescribed manner and format.
The NCCPL would be depositing the collected tax money in a separate bank account with the National Bank of Pakistan and the said amount shall be paid to the FBR along with interest accrued thereon on yearly basis by July 31 next following the fiscal year in which the amount was collected. The Pakistan Revenue Automation Limited (PRAL) or any other firm approved by the FBR would conduct regular system and procedural audits of the NCCPL on quarterly basis to verify the implementation of this schedule and the relevant rules. However, no penal action would be taken against the NCCPL if it commits an error occurred from application of the system. If unable to recover by its own, the NCCPL would refer the defaulting taxpayers to the FBR.
The Ordinance also includes “transitional provisions” saying: In respect of tax year 2012, for the period commencing from coming into force of this schedule till June 30, 2012 the certificate issued by the NCCPL under the relevant rule should be the basis of capital gain and the tax thereon for that period.
