Tag: Capital Gains Tax

  • PSX witnesses largest single-day jump with gain of 3,410 points

    PSX witnesses largest single-day jump with gain of 3,410 points

    Pakistan’s benchmark stock index (PSX), the KSE-100, experienced an unprecedented surge on Thursday, marking its most significant gain in a year.

    This rally follows the government’s announcement of the 2024-25 budget, which alleviated concerns regarding potential increases in capital gains and dividend taxes.

    The KSE-100 index soared by 3,410.7 points, or 4.7 per cent, reaching 76,208 points. This increase represents the largest single-day jump in point terms.

    In the index’s history and the highest percentage rise since the International Monetary Fund (IMF) bailout package was introduced last year.

    Investor sentiment remained overwhelmingly positive throughout the trading session. The index hit an intraday high of 76,338.15 points, an increase of 3,540.72 points, and a low of 73,329.80 points, still up by 532.37 points.

    By the end of the day, the total volume traded on the KSE-100 index was 344.98 million shares.

    Out of the 100 companies listed on the index, 87 saw their shares close higher, nine experienced declines, and four remained unchanged.

    The government’s decision to set the capital gains tax at a flat rate of 15 per cent for filers on the sale of securities acquired on or after July 1, 2024, was a significant factor contributing to the market’s positive performance.

    For non-filers, capital gains will be taxed at normal rates, with a minimum rate of 15 per cent and a maximum rate of 45 per cent.

    This decisive move by the government has been well-received by investors, bringing clarity and stability to the market and fostering an environment of confidence and growth.

  • IMF urges Pakistan to expand capital gains tax scope to include cryptocurrencies

    IMF urges Pakistan to expand capital gains tax scope to include cryptocurrencies

    The International Monetary Fund (IMF) has advised the Federal Board of Revenue (FBR) to broaden the scope of capital gains tax (CGT) by incorporating cryptocurrencies into the tax regime.

    This recommendation arises amidst ongoing discussions between the Fund and Pakistani authorities regarding the $3 billion stand-by arrangement (SBA).

    The four-day review, which commenced on Thursday, aims to unlock the final tranche of approximately $1.1 billion secured by Islamabad under a last-minute rescue package last summer, thus averting a sovereign debt default.

    During these deliberations, the IMF proposed a reassessment of tax slabs for real estate and listed securities to ensure comprehensive taxation of all gains, irrespective of asset holding periods.

    Moreover, the IMF urged the FBR to mandate property developers to monitor and report all pre-completion property transfers, with penalties for non-compliance. This move aims to bring under the tax umbrella the prevalent practice of trading property plot files within housing schemes.

    These recommendations are anticipated to be incorporated into the forthcoming bailout package under the Extended Fund Facility (EFF), potentially becoming integral to the FY2024–25 budget through the finance bill.

    The IMF’s technical assistance report highlights the challenges faced by Pakistani authorities in assessing and collecting taxes on capital gains from real estate transactions, particularly those occurring before formal property registration.

    To address this issue, the IMF suggests obligating property developers to track and report all pre-completion property transfers, with penalties for non-compliance, thereby shifting tax liabilities to developers if they are not recoverable from the initial transferor.

    Furthermore, the IMF advocates for the expansion of assets subject to capital gains tax to include emerging investment avenues such as cryptocurrencies alongside real estate and listed securities. 

    It also proposes revising tax slabs to ensure equitable taxation of capital gains, irrespective of asset holding durations.

    Overall, these IMF recommendations seek to fortify the taxation framework, ensuring a more inclusive and equitable approach to capital gains taxation in Pakistan.