Pakistan Tax Bar Association Presentation on Capital gains

Pakistan Tax Bar Association Presentation on Capital gains and deductions At PTBA Summer Camp-2009 By Mr. Muhammad Younus Ghazi B. Com (Hons); M. Com; FCA Chartered Accountant Multan

Capital gains and deductions l ‘Capital Gains’ and basis of chargeability (Sec. 37) l ‘Capital asset’ – Meaning & Scope (Sec. 2(10)) l Other points for consideration l ‘Disposal’ of capital asset (Sec. 78) l Certain disposals not chargeable to tax (non-recognition rules ) (Sec. 79, 95 to 97)

Capital gains and deductions l Computation of “Capital Gains” (Sec. 28) l Determination of “cost acquisition” and “consideration” (Sec. 76 & 77) l Fair market value (Sec. 76(3) read with 75(6)) l Expenditure allowed to determine cost (Sec. 76(2)(c)) l Cost where asset is acquired through loan (Sec. 76 (5))

Capital gains and deductions l Cost where asset is partly disposed (Sec. 76 (7)) l Cost where asset by a person is the derivation of an amount chargeable to tax (Sec. 76 (8)) l Cost where asset by a person is the derivation of an amount exempt from tax. (Sec. 76 (9))

Capital gains and deductions l Cost of asset not to include the amount of any grant, subsidy, rebate, commission or any other assistance. (Sec. 76 (10)) l Consideration received (Sec. 77) l Consideration where asset is lost or destroyed (Sec. 77(2)) l Consideration where business asset is put to private use (Sec. 77(3))

Capital gains and deductions l Consideration in case of leased out asset on maturity (Sec. 77(4)) l Consideration in case of multiple assets through single transaction (Sec. 77(5)) l Value of bonus shares for the purpose of capital gains l “Capital gain” when considered Pakistansource income (Sec. 101(5)&(10))

Capital gains and deductions l l Exemptions (CIs. (110), (111), (113) & (114) Part 1, 2 nd Sch. ) Capital gains on sale of shares of public companies (CI. (110), Part 1, 2 nd Sch. ) Capital gains in the course of corporatization of an existing stock exchange. Capital gains on acquisition of shares and trading or clearing rights acquired by such member in new corporatized stock exchange.

Capital gains and deductions Capital gains on sale of shares of public companies derived by any foreign institutional investor (CI. (111), Part 1, 2 nd Sch. ) l Capital gains from the sale of shares of public company set up in any Special industrial Zone. (CI. (113), Part 1, 2 nd Sch) l Capital gains from the sale of shares of an industrial undertaking set up in an area declared by the Federal Government to be a “Zone”. (CI. 114, Part I, 2 nd Sch. ) l

Capital gains and deductions l Capital gains from the sale of ships and all floating crafts. l Valuation of asset by a valuer (Sec. 222) l Loss under the head “Capital Gains” (Sec. 59)