The federal government reduced the rate of capital gains tax on shares held for two years and in case of complete abolition of CGT in the sixth year, gave billions of rupees in income tax exemption to stock market players.
According to government sources, the federal government rejected the Federal Board of Revenue’s proposal to increase the CGT rate from 12.5 per cent to 15 per cent, which would add an additional Rs 5 billion in revenue. Capital gains tax has been fixed but the concept of profit tax has been reintroduced during the holding period.
The move by the government will benefit stock market players by at least Rs 8 billion. The move is also against Prime Minister Shahbaz Sharif’s policy of taxing the rich and giving relief to the poor.
According to the next budget document, the government has fixed 15% capital gains tax on sale of shares within one year of purchase. Similarly, for the second year, the rate is proposed to be 12.5%, 10% after two years, 7.5% after the third year, 5% after the fourth year, 2.5% after the fifth year and 6 years after the sale of shares. There will be no tax.
Former FBR chairman Shabar Zaidi says that according to my estimates, the stock market has been given a relief of Rs 4 billion. Revenue from the stock market is estimated at Rs 20 billion and according to sources, the volume of relief could be up to Rs 8 billion.