Karachi: Reproduced hereunder SRO 715(1)/2001 dated July 20, 2011 received from Revenue Division, Federal Board of Revenue, Government of Pakistan, regarding draft amendments made in S.R.O. 112(1)/2011 dated February 11, 2011 with respect to:
i. Treatment of profit made on sale of borrowed shares under Margin Trading Scheme and Margin Financing Scheme
ii. Wash sales
iii. Extension in e-filing of statement of advance tax from seven days to 21 days
iv. Information regarding members, brokers, investors of stock exchanges.
This is for the information of the Members of the Karachi Stock Exchange and comments, if any.
(Copy of the same is also available on our Website www.kse.com.pk).
Government of Pakistan (Revenue Division) Federal Board of Revenue
Islamabad, the 20 July, 2011
S.R.O. 715 (1)/2011.This draft of following further amendments in the Income Tax Rules, 2002, which the Federal Board of Revenue proposes to make in exercise of the powers conferred by sub-section (1) of section 237 of the Income Tax Ordinance 2001 (XLIX of 2001),is hereby published as required under sub-section (3) of the said section, for the information of all persons likely to be affected thereby and notice is hereby given that the draft will be taken into consideration after fifteen days of its publication in the official gazette.
2. Any suggestion or objection which may be received from any Person, before the expiry of the aforesaid period, shall be considered by the Federal Board of Revenue.
In the aforesaid Rules:-
(a) In rule 13E, after sub-rule (5), the following shall be added:-
“(6) Profit made on sale of borrowed shares shall be treated as capital gain when such shares are acquired for their return to Authorized Intermediary, Period intervening between acquisition and disposal of such borrowed shares shall determine the holding period in which the capital gain or loss falls, Specific Identification Method shall be used to determine the acquisition cost and consideration for disposal of such securities. The difference between cost of acquisition and consideration received against disposal (net. Off all borrowing costs) of such shares, Shall be treated as capital gain or loss. This rule shall be applicable to the securities borrowed in accordance with Securities Lending and Borrowing Scheme approved by Securities and Exchange Commission of Pakistan.
(7) Profit made on disposal of shares acquired under Margin Finance Scheme, Margin Trading Scheme or other Finance or Leverage scheme approved by Securities and Exchange Commission of Pakistan shall be treated as capital gain. The difference between cost of acquisition (inclusive of borrowing cost) and consideration received against disposal of such shares shall determine the quantum of capital gain or loss;
(b) in rule 13F, in sub-rule (1), for clause (a), the following shall be substituted namely:-
“(a)” Wash Sales where capital loss realized on sale of specific Security by and investor is preceded or followed in one month’s period by purchase of the same security by the same investor whereby the transaction falls within one month between same two parties or their related parties where one was seller and other
Was buyer and they change places becoming buyer and seller respectively, thus, maintaining the portfolio;-
(c) in rule 13 H, in sub-rule (2), for the word “seven” the word “twenty one ” shall be submitted ; and
(d) For rule 13J, the following shall be substituted namely;-
“13J Exchange of information. – (1) Information regarding member, broker, investor of a stock exchange required by the Federal Board of Revenue shall be obtained directly form National Clearing Company of Pakistan Limited (NCCPL)”.
For more information, contact:
Karachi Stock Exchange
Tel: +9221 111 001 122
Fax: +9221 3241 0825, +9221 3241 5136