Islamabad: The Securities and Exchange Commission of Pakistan (SECP) has suggested to the Federal Board of Revenue (FBR) the alignment of capital gains tax (CGT) rates on the disposal of securities with those on the sale of immovable property, as reported by the news source on May 31.
According to the details, the SECP recommended removing the anomaly by aligning CGT rates on securities with those on immovable property in the budget proposals for the upcoming fiscal year (2024-25) . This move aims to eliminate tax-driven distortions between different asset classes and encourage documentation of real estate transactions. Specifically, the SECP proposed removing the flat CGT rate of 12.5 percent applicable to securities acquired between July 1, 2013, and June 30, 2022. Instead, gains on such securities would be subject to the same rates as those acquired after June 30, 2022. This adjustment is expected to ease speculative pressure on real estate prices in Pakistan, where much undocumented wealth is currently invested.
Furthermore, the SECP recommended inserting a separate clause in section 233 for brokerage and commission paid to brokers of the Pakistan Stock Exchange. This measure aims to reduce the tax burden on brokers and foster growth in the capital market. The SECP proposed reinstating tax credits for investments in initial public offerings, equity mutual funds, and exchange-traded funds. This reinstatement, along with the proposed removal of tax credits on investments in IPOs and mutual funds, is expected to promote savings and encourage investment in regulated sectors.
