a 239 Chapter 9 CAPITAL GAINS [Section 37} 11 of the Income Tax Ordinance, 200 source of income for a person and is d, other than a gain which is exempt from tax. 1, provides that capital chargeable to tax under Gain. It means any gain arising from the disposal of capital Such as income shall be chargeable under the head “capital gail hall be deemed to be the income of that year in which disposal ) Asset; means property of any kinds held by a person. It is whether the property is connected with his business or not, es not include :- Stock in trade, consumable stores or raw material held for Mi? bs ny Depreciable asset or amortizable assets (i.e. fixed assets, and for business use) . able property held for personal use of the person of any i family member. of Capital Assets named:- (Section 37A) »f public company s of PTCL certificate rent of redeemable capital as defined in the Company= (CAPITAL GAINS ei, i) Inall Cases Hess j) Future commodity contracts 5% jutual Funds, Collective Investment Schemes and REIT Scheme shalt 4 tax on capital gains arising on redemption on securities @10% for ls and AOP. For companies, the withholding rate shall be @ 10% ds and 25% for others. Further, in case of Stock Funds, if the #s0n sustains a loss on disposal of securities in a tax year such loss juced from the taxable capital gain the person has received from in the same year. Such loss, however, cannot be carried gains arising from the following cases are not includible in the ‘of the person and hence exempt from tax, pier company in Export processing Zone (EPS). property sold to the development REIT scheme with the f development and construction of residential building, fa membership right held by a member of an existing stock or acquisition of shares and trading for clearing rights sy such member corporate stock exchange. tion of Capital Gain on disposal of immovable property int of gain arising on disposal of immovable property both and open plots shall be calculated as follows: Where the holding period exceeds one year but | does not exceed two years Where the holding period exceeds tw | does not exceed three years E ere the holding period exceeds three years but | does not exceed four years ‘ 0 years butunt of gain calculated by iy the time of disposal- eos, considered as a security iP ime of disposal of. Shares, ead capital gain deriveq by of constructed resident; year 2021, provided tha Ya lal proy t following reduced by 75%, id to dependent of a Shaheed of jovernment employee ie of holding period.CAPITAL GAINS “a3 RATES OF CAPITAL GAIN TAX OTHER THAN GAIN ON SECURITIES AND IMMOVABLE PROPERTY ble to Company, Individual and AOP the Capital Gains has Income Tax on the taxable as a result of disposal of income including such capital a within twelve gains. from the date of their In other words, capi i J s, capital gains shall ion in hands of all be treated as normal profit in case . it arises on disposal of capital assets within twelve months of their acquisition. the Capital Gains has Income Tax on the taxable a result of disposal of income including 75% of such sset after twelve months capital gains. : date of their acquisition. J capital gain has arisen as a result of disposal of capital asset than property within twelve months from the date of their the hands of the persons, then apply the following formula: B=C e consideration received by the person on disposal of asset, the cost of the asset, and the capital asset becomes the property of the person: inder gift, bequest or will; inheritance or devolution; succession, a distribution of assets on dissolution of an association of persons; ir ‘on distribution of : e of the asset, treate ‘asset on liquidation of a company; ‘on the date of its transfer or xd to be the cost of the asset. fair market valu Juisition by the person shall be: Income Ta: n that is not wholly an ofasset, “4 [Section 38] tax under the head shall be treated 1e person during capital asset ible to tax. asset shall be | disposal of luded in the(CAPITAL GAINS. o45 Any expenditure incurred by a person that lowed deduction under any other provision of the Income Te deduction of the Income ‘Tax Any expenditure incurred by a person that is not wholly and exclusively in connection with the disposal. No loss shall be recognized under the Income Tax Ordinance, 001, on the disposal of the following capital assets, namely: A painting, sculpture, drawing or other work of art; Jewellery; _ Arare manuscript, folio or book; A postage stamp or first day cover; A coin or medallion; or f) An antique. is a businessman and the particulars of his income for the }0" June 2021 are as under: ft on encashment of Defence Saving Certificates Rs. 10,000 ‘on sale of public company shares iding period less than 12 months) 60,000 come from business 5,72,000 ed, You-are required to compute the taxable income and tax Khalid. He is an active tax payer. Mr. Khalid Tax Year: 2021 Tax Year Ended 30.06. 2021 / _ Personal Status: Individual (Non-salaried person) Residential Status: Resident Computation of Tax Payable Business (Section 18) ne from business a: (Section 37) | ’ sale of shares of | public compan; Rave - g period less than 12 months) 60,000 block of income Rs. 5,72,000@ 15% as holdin iltinational company. 02 pecacalate his ta ( % Rs. 12,00,000 3,00,000 5,00,000 2,00,000 1,00,000 1,80,000 70,000 4,00,000 Rs. 12,00,000 3,00,000 ~ 5,00,000CAPITAL GAINS. 247 1,00,000 gain on sale of securities Rs Ce te block of income) 70,000 ii 4,00,000 a 23,00,000 1,80,000 21,20,000 on Rs. 12,00,000 70,000 ‘on Rs. 920,000 @ 15 % 138,000 208,000 con capital gain on sale urities Rs. 70,000@ 7.5 % 5.250 irate block of income) 213,250 24 months and the securities were purchased before means share of a public company, voucher of Pakistan munication Corporation, Modarba Certificate, an instrument of le capital and derivative products. Rs. 5,00,000 1,00,000 jallowance 55,000 in on sale of securities ‘period more than 24 months in after 01.07.2016) d 5 1¢ of educational institution established Hs d areas of Khyber Pakhtunkhwa é Calculate the tax payable by Miss Rashida.8 INCOME Tax Miss Rashida Tax Year: 2021 Tax Year Ended: 30.06. 2021 Residential Status: Resident ‘Computation of Tax Payable Income from Salary Section 12 iy Basic salary Rs a 5,00,09 ~ Commission 0 1,0 Medical allowance 55,000 10,0 Less Exempt 10% of basic salary (RS. 5,00,000 x 3) 50,000 5,000 of educational institution established areas of Khyber Pakhtunkhwa 40,00 ble with effect from 1.7.2011) > gain on sale of securities) 200,000 = 6.45,000 nil 2250 2,250 30,000 32.250 _institution established in effected areas 0! FATA and PATA was exempt for a period o! June 2011. From tax year 2012, it is taxed. abled person, registered with NADRA ie Teceived the following income during ‘he Rs. 4,50,000 1,50,000CAPITAL Gans, \dhoe relief @ 50% of basic salary ital gain on sale of securities purchased on 01.05.2013 69, 00% withdraw! from bank in a single day before 10" March 2021 1 20, a 249 jainment allowance 35,000 ycome from talk delivered on TV (gross) 5,000 ation to government hospital 30,000 akat Deducted by bank 25,000 es cag the tax payable by Mr. Qayyum Khan. ~ Mr. Qayyam Khan (Disabled Person) | Tax Year: 2021 Tax Year Ended: 30.06. 2021 Residential Status: Resident _ Computation of Tax Payable eae, Rs. Var 4,50,000 of living allowance 1,50,000 © relief @ 50% of basic salary 2,25,000 inment allowance " 35,000 me from talk delivered on TV (gross) 5,000 | gain on sale of securities d before 01.07.2013 (sonon taxable) 60,000 s al income 8,65,000 s Zakat Deducted by bank 25,000 le income 8,40,000 tion of Tax Payable me tax on Rs. 600,000 nil ‘tax on Rs. 240,000 @ 5 % 12,000 12,000 il ief lmissible for Average Reli Soa ion to government hospital icted upto 30% of taxable income) 140,000 x 22, = Rs. 252,000Rs. 6,90,000 70,000 8,000 20,000 10,000 36,250 12,000 3,000 2,000 20,000 5,000 80,000CAPITAL Gains 251 Mr. Ali Tax Year: 2021 Tax Year Ended: 30.06. 2021 Personal Status: Individual (Salaried Person) _ Residential Status: Resident i ‘Computation of Tax Payable om Salary (Section 12) Rs. 6,90,000 70,000 7,60,000 siness (Section 18) poultry farm 36,250 n sale of securities (holding period in one year) 80,000 Es block of income) in on sale of shares of private co. 20,000 cempt 25% of capital gain 000 x 2) 5,000 pe 15,000 pital loss 5,000 10,000 m Other Sources (Section 39) hment of Defence Saving Certificate 20,000 - cempt (Capital receipt) ral income 10,000 6 ihe 8,06, s from association of persons. f 000 ses) —3.000 i: (included for rate purpo: ion Income n of Gross Tax (salaried case) nil Rs. 600,000 10,463 10,463 Rs, 209,250 @5% income excluding share from AOP10,269 412,000 22,269 — 300 60,000 36,000 90,000 100,000oe 253 on 3! January 2019 ang sold on CAPrTAL Gans "the property was purchased 020 securities were purchased on 15.07.216 and sold on 30.01 Miss Rimsha Tax year 2021 Tax year to end on 30.06, 2021 Residential status: Resident g=y>ye Computation of tax payable ss (Section 12) c Salary 420,000 ities allowance : 36,000 ical Allowance 60,000 pt 10% of Basic Salary 42,000 18,000 474,000 ble income ‘ax on Rs, 400,000 nil tax on Capital gain on sale constructed property 90,000 x % 67.500 ling period more than two years but less ears So 75% will be taxed * 500 @ 5%. 3,375 ital gain on sale of securities 100,000 curities were purchased after )1.07.2016 so the rate- of tax @ 15% 100,000 15,000 sic Salary 12,50,000 erest free loan by employer payable in 2025 20,00,000 80,000 i ived Dividend recei fa pital gain on sale of securities12,50,000 36,000 18,000ie ee OW 255 ‘CAPITAL Gains, ities were purchased after 01.07.2016 so the’ rate of tax j x is Ivas sold within two’”years but thi “Mansha as dependent of a TEA ae es ated it is exempt from tax. Fare the particular of Mr.Ali Professor in a recognized ye year end ended ; i rth Rae 2021. Compute his tax payable. 250,000 P.M 300,000 25,00,000 30,000 40,00,000 was purchased 10 and half years back) # ‘on sale of constructed property 1,85,00,000 iruction of property was completed cember 2020) Mr. Ali Tax year 2021 Tax year ended on 30.06.2021 " Residential Status: Resident Computation of tax payable Income from Salary (Section 12) sic Salary(250,000 x 12 ) 30,00,000 Yearness allowance 300,000 of interest free loan @ 10 % of 25,00,000 250,000. able salary 35,50,000 s zakat deducted 30,000. ble under section 12 35,20,000 fax on Rs. 35,00,000 ea Tax on Rs.20,000@ 20 % 4,000 . eC 374,000 llowance for teachers "(25 % of tax payable 374000 @ 25% 93,500 igo Taxable salary on plot Rs. 40. 00,00022.30.50 t ‘for the year ended 30.06 202) for the period. Pi i 46,58,500 36,00,000 850,000 25,500 250,000 175,000 da half years back for the Armed Forces 8 months back. jae 809,900CAPITAL GaIs 257 missible for Average Relief Investment in health insurance — 150,000 Donation to approved institutions 275.000” (both within limit) a Amount entitled to A.R. 425.000» Average relief 5 809900 aes3000 0 Rs. 74,295 Net tax =809900 ~ 74295 735,605 __ Add: Tax on capital gain Gain on sale of shares 850,000 850,000 @ 15% 127,500 Shares acquired after 01.07.2016 Gain on sale of plot 36,00,000 (holding period 3% years ) 36,00,000 @ 25% 900.000 Tax on 900,000 @ 2.5% 22,500 _ Less rebate on tax @ 75 % 16,875 (as the allottee is ex serviceman) 5,625, Tax payable with return 868,730 s purchased after 01.07.2016 are taxed @ 15% plot sold by Mr. Akbar was allotted to him as ex-serviceman re than 3 years back , so he was entitled to a tax concession of 75% tax. ON 10 ti 4 a Fatima received the following income during the year ended 1021. Calculate her tax payable. __ Basic Salary Rs. 250,000 P.M Bonus(2 month salary) Sen Utilities ee Pat Zakat paid during the year x af ital gain sale of constructed property Re Gh on sale of a public company shares 20h Gain on sale of Modarba. Certificate SayIS acquired on 01.03.2018 aNd slg Re irchased in 2018 ‘in 2015, Rs, 30,00,000 500,000 80.000 sro 120.000 36,60,000 402,000CAPITAL Gains, 259 TAX YEAR 2022 owing major changes have been introduced by Finance Act, will be applicable w.e.f. tax year 2022, of tax on capital gain on sale of immovable : Property (bot constructed prosperities) shall be as follows vet, Se oeat Rate of Tax ere the gain does not exceed five million 3.5% e the gain exceeds Rs. 5 million but does | 7.5 % exceed Rs. 10 million : re the gain exceeds RS. 10 million but does | 10% | not exceed Rs. 15 million ere the gain exceed Rs. 15 million 15% of tax to be paid on disposal of securities for the tax year follows: ie securities were purchased after 01.07.2013 | 12.5% secu were purchased before | Nil 013 commodity contracts 5% ulars alate to Miss Hadia for the year to end on ate her tax payable... Rs. 125,000 P.M is 2 months salary ecial allowance 200,000 on sale of plot 1,70,00,000 inc f rt} i ‘odin 2015, 2 80,00,000 30,00,000 ital gain on sale of securities s situated in 500 Sq yards and was self occupied nd a half years back lo chased two al bedi in 2021. ecurities were purchase iRs, 1 5,00,09 250,009 200.009 19.50.00 112,509 637,500