IFCG Flashcards
Name things which are not included in capital assets?
Capital asset does not include;
a ) any stock-in-trade , consummable stores or raw materials held for the purpose of business
b ) any property for which a depreciation or ammortization deduction is allowed under the head income from business or
c ) any movable property held for personal use by the person of his family dependent.
Name Capital assets?
1: Shares of a private company (NTR)
2: share of member in partnership firm
3: Capital gain on disposal of security (separate block)
4: Disposal of immovable property (separate block)
_personal land
_personal building
_business land
5: Movable property held for personal use:
-A painting sculpture drawing or other work of art
-jewellery ;
-a rare manuscript, folio or book;
-a postage stamp or first day cover;
-a coin or meallion; or
-an antique
Will gain arising on the disposal of Capital asset is chargeable under the head capital gain?
Gain arising on the disposal of Capital asset ( category 1 category 2 , securities, movable property ( jewellery etc) immovable property etc) shall be chargeable under the head capital gain
Gain on disposal of immovable property?
A gain arising on the disposal of immovable property (open plot or constructed property or flat ) situated in Pakistan by a person in a tax year shall be chargeable to tax as separate block on the basis of holding period
What are the exemptions on capital gain?
Capital gain is exempt when person is dependent of Shahid belonging to Pakistan Armed Forces or a person who dies during service of PAFs or Federal or Provincial governments.
Capital gain tax rates have been reduced by 50% in case of the first sale of immovable property acquired or allotted to ex servicemen and serving personnel of Armed Forces or ex-employees or serving personnel of federal and provincial governments, being original allottees of the immovable property, duly certified by the allotment authority.
Moreover in case of any capital gain arising after completion of three years from the date of acquistion of immovable property, the amount of tax payable for above persons shall be reduce by 75%.
Deduction of losses in computing the amount chargeable under the head “Capital Gains”?
1:For calculating the capital gain for a tax year, a deduction shall be allowed for any loss on the disposal of a Capital asset.
2:Losses will not be allowed as deduction where gain on the disposal of asset is not chargeable to tax. (Exempt asset wala case)
3:Cost shall not include any expenditure
- which is deducted under another head of income
-which is not allowed as deduction under the head income from business
4:No loss shall be recognised on the disposal of the following capital assets;namely
- a painting sculpture drawing or other work of art
-jewellery
-rare menuscript folio or book
-a postage stamp or first day cover
-a coin or medallion or an antique
Describe security?
Security means share of a public company, voucher of Pakistan telecommunication corporation, modaba certificate and instrument of redemable capital, debt securities, units of exchange traded fund and derivative products.
Describe derivative products?
Derivative products means a financial product which derives its value from underlying security, may be traded on stock exchange and includes deliverable future contracts
How to treat Loss on disposal of security?
Loss on disposal of securities in current year shall be setoff only against the gain from any other securities. Loss that has not been setoff in current year can be carried forward to the subsequent three tax years from the tax year in which loss was first computer how ever loss can be adjusted only against the gain from disposal of securities.
Describe situations where NTR is used for tax calculation on disposal of securities.
Share for listed company made otherwise then through registered stock exchange and which are not settled through NCC PL.
Shares through initial public offer during the listing process except where the detail of such disposal is furnished to NCCPL for computation of capital gains and tax thereon under section 37 A.
