SRO 639 (I)/2021 Carrying Forward of Loss on Disposal of Listed Securities (Draft Amendment in Income Tax Rules, 2002)

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Snapshot

Reference No.

SRO 639 (I)/2021

Description

Setting off of Loss on Disposal of Listed Securities (Draft Amendment in Income Tax Rules)

Date of Issuance

1 June 2021

Objective

To allow to carry forward the loss against gain on disposal of listed securities

Effective date

FBR has sought objection or suggestion on the draft to be sent within 15 days of the publication of notice.

 Explanation

The draft amendments have suggested changes in the following rules of Income Tax Rules, 2002:

  1. Rule 13D deals with computation of capital gain or loss. Currently, capital loss arising on the disposal of securities in any tax year is not allowed to be carried to the subsequent years. The draft amendments suggests that any loss on the disposal of listed securities from FY 2019 to onward if could not be set off against the gain on the disposal of other listed securities, such loss could be carried forward to subsequent three year.
  2. Rule 13N describes the special procedures for computation of capital gain and collection of tax. Its sub-rule 7 has been amended to allow the carry forward of loss on listed securities to set off against gain of listed securities in subsequent 3 year period.
  3. The draft rules have also included a form (Form A) which shall be issued by NCCPL to taxpayer as annual certificates of capital gains.
  4. FBR has proposed to inserted sub-rule 7A after sub-rule 7 in order to define the procedure to carry forward the loss on listed securities.

a.     NCCPL shall set off loss of the previous year only if the person was an active tax payer in that year. NCCPL may ask IT wing of FBR to provide ATL list.

b.     Adjustment of loss shall be allowed on monthly basis by NCCPL from the first month of updation of ATL for that tax year and on first-in first-out (FIFO) basis.The draft rules have also included a form (Form A) which shall be issued by NCCPL to taxpayer as annual certificates of capital gains.

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