Capital Gain Tax-CGT System

1. Capital Gain Tax-CGT System NCCPL Presentation September 17, 2012

2. Overview and Procedures of the New CGT Regime

3. Overview and Procedures of the New CGT Regime • Following are the Persons/Investors to which new CGT Regime will be applicable: • Individual Investors; • Brokers; and • Corporate Entities. • However, following Persons/Investors will NOT be covered under new CGT Regime: • Mutual fund; • Banking Company; • Non-Banking Finance Company; • Insurance Company; • Modaraba; • ‘Foreign Institutional Investor’ being a person registered with NCCPL as a foreign institutional investor; and • any person or class of persons as notified by the FBR.

4. Overview and Procedures of the New CGT Regime • Any Person/Investor may Opt-Out from the new CGT Regime. • For Opting-Out, Person/Investor shall be required to file an Irrevocable Option to NCCPL after obtaining prior approval of the Income Tax Commissioner. • New CGT Regime will NOT be applied on such Person/Investor who Opted-Out.

5. Overview and Procedures of the New CGT Regime Principles of Holding Period of Inventory Before the Promulgation of New CGT Regime

6. Overview and Procedures of the New CGT Regime Principles for Physical Securities Deposited into CDS

7. Overview and Procedures of the New CGT Regime Types of Transactions Covered under New CGT Regime: • Marekt Based Transactions • Sale and Purchase Transactions including Day-Trading Executed or to be Executed on the Trading Platform of the Stock Exchanges. • Non-Market Transactions • Movement of Securities Through Free-Delivery (FD) Mechanism of CDS.

8. Overview and Procedures of the New CGT Regime General Principles for the Determination and Computation of CGT • CGT will be Determined and Computed on the Transactions and their Values as Reported to or Provided to or Extracted from the Systems of Stock Exchanges, Central Depository Company of Pakistan Limited and NCCPL. • First In First Out (FIFO) Inventory Accounting Method will be used. • In Determination and Computation of CGT, First Priority shall be given to the Market Based Transactions. • Capital Loss in any Financial Year Shall be Set Off against Capital Gain of that Financial Year. • Capital Loss in any Financial Year Shall NOT be Carried to a Subsequent Financial Year.

9. Overview and Procedures of the New CGT Regime General Principles for the Determination and Computation of CGT • Fixed Cost of 0.50% on non-proprietary trades and 0.25% on proprietary trades on Disposal or Acquisition of Securities, as the case may be, in lieu of all Expenses will be Deducted or Added while Determination and Computation of CGT. • However, such Fixed Cost shall only be allowed in respect of Market Based Transactions. • Financing Cost Incurred through NCCPL’s Leveraged Market Products shall be Taken into Account while Computing Capital Gains. • CGT shall be Collected on Monthly Basis for Transactions Settled in a Month, after Adjustment of Losses or Refund of amount collected of the Previous Month or Months of the Same Financial Year.

10. Overview and Procedures of the New CGT Regime General Principles for the Determination and Computation of CGT • CGT shall be Collected From or Through the Respective Clearing Members on Net Capital Gainsof Persons/Investors. • Any Person/Investor, if Not Satisfied with the Computation of Capital Gain or Tax thereon or both made by NCCPL, such Person/Investor may Re-Compute the Capital Gain and Lodge Claim of Refund, if any, with the Commissioner of FBR. • Persons/Investors (covered under new CGT Regime) Shall NOT be Required to Maintain Records and Accounts w.r.t CGT. • Wash Sales, Cross Trades and Tax Swap Sales Shall not be Taken into Account by NCCPL while computing Capital Gains.

11. Overview and Procedures of the New CGT Regime General Principles for the Determination and Computation of CGT • The Amount Collected by NCCPL, in respect of Capital Gains, on behalf of the FBR, Shall be Deposited in a Separate Bank Account with National Bank of Pakistan and such Amount Shall be Paid to the FBR Alongwith Interest Accrued Thereon on Yearly Basis by July 31. • In Case of Non-Recovery of CGT from any Person/Investor through its Clearing Member, for any reason whatsoever, NCCPL Shall Refer a Particular Case for Recovery of CGT to the FBR. • Defaulted Person/Investor may also be Restricted from Taking New Positions in all Markets for a Period of Three Months and such Restriction will be Continued till the Recovery of Amount of CGT.

12. Overview and Procedures of the New CGT Regime General Principles for the Determination and Computation of CGT • The Short or Non-Collection of CGT in any Month During the Financial Year shall Continue to Appear in the CGT Liability of Coming Month or Months of the Same Financial Year. • Brokerage Account of the Persons/Investors shall NOT be Closed Until and Unless such Persons/Investors Obtains a Clearance Certificate from NCCPL.

13. Overview and Procedures of the New CGT Regime General Principles for the Determination and Computation of CGT • Following Certificate / Statement Shall be Issued and Provided by NCCPL: • Annual Certificate Showing Computation of Capital Gains and Tax thereon, if any, to each Eligible Person/Investor within Thirty Days from the End of the Financial Year. • Quarterly Statement of Amount Collected from Eligible Persons/Investors shall be Furnished to the FBR within Thirty Days from the End of Each Quarter. • Every Person/Investor Shall also File the Annual Certificate, as provided by NCCPL, Alongwith the Return of Income.

14. CGT System Reports

15. CGT System Reports Following CGT Reports have been made available in CGT System: • CGT Gain/(Loss)Detail • CGT Inventory • Slab wise Inventory Balance Report; • Date wise Inventory Detail Report; and • Inventory Balance Detail Report • CGT Consolidated Summery • CGT Consolidated Sum • CGT Gain/Loss Non Inventory • CGT Gain/(Loss) Summery

16. CGT System Reports CGT Consolidated Summery Report (NET CGT OBLIGATION) • This Report Contains ALL INFORMATION OF ENITRE CGT: • Current Month CGT Position • Previous Month CGT Position • As of Reporting Month CGT Position • Previous Month Non-Payment and Allocation • Final As of Reporting Month CGT Position

19. CGT System Reports CGT Consolidated Summery Report Type • CGT Gain/Loss Non Inventory This Report represents the Gain/Loss and CGT for Square-up Transactions of Various Market: • Market-wise Capital Gain/(Loss) • Total Gain/(Loss) • Total CGT

21. CGT System Reports CGT Gain/(Loss)Detail Report This Report represents the following out-going information of Sales/Disposal with Number of Days: • Symbol • Taxable and Non-Taxable Quantity • Capital Gain/(Loss) • Number of Days • CGT Slab • CGT

22. CGT System Reports

23. CGT System Reports

24. CGT System Reports CGT Gain/(Loss) Summary (out-going) This Report represents the following Detailed Out-going information: • Symbol • Total Out-going Inventory (Taxable and Non-Taxable Quantity) • Capital Gain/(Loss) • Number of Days • CGT Slab Percentage • CGT

27. CGT System Reports CGT Inventory Report Report Type • Slab wise Inventory Balance Report This Report represents the following Balance information of Purchase/Acquisition: • Symbol • Applicable Slab Rate of Inventory • Total Volume

30. CGT System Reports CGT Inventory Report Report Type • Date wise Inventory Detail Report This Report represents the following in-coming information of Purchase/Acquisition : • Symbol • Market Based Inventory • Non-Market Based Inventory • Total Volume • Adjustment of Expenses • Net Purchase Value and Price

32. CGT System Reports CGT Inventory Report Report Type • Inventory Balance Detail Report This Report represents the following Date-wise Balance information of Purchase/Acquisition : • Symbol • Available Quantity in Inventory • Price • Shares Value

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