Government to Abolish Advance Tax on Sale/Purchase of Shares

In the upcoming mini-budget, the government will abolish the advance tax on the purchase and sale of shares. The advance tax of 0.02% will be abolished by the ruling government. This was one of the most important demand by the stock exchange people.

A suggestion has been given by the Ministry of Finance in its summary that the Income Tax Ordinance (ITO) Section 65C gives incentives for listing the firms by their tax credits. This incentive can be increased to ensure new added listings.

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The details revealed about the mini-budget show that the advance tax on sale and purchase of shares will be abolished by the government. In the Finance Act 2016 the advance tax rate on sale/purchase of securities was doubled to 0.02 percent from 0.01 percent.

This advance tax of 0.02% is being considered on the higher side. Federal Board of Revenue has suggested the PSX proposals in this regard.

Another demand by the stock exchange players was to permit the carry forward of capital losses by upto 3 years. A recommendation has been given by the Finance Ministry that changes in the ITO may be carried out to permit the capital losses made on securities disposal.

The third demand by the stock exchange players was of the Capital Gains Tax (CGT) rationalization on equities on track with real estate.

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