Gain arising on disposal of certain debt securities Section 151A

Gain arising on disposal of certain debt securities Section 151A: The Finance Act, 2025 has brought about certain amendments in the Income Tax Ordinance, 2001 (the Ordinance, hereafter). Some significant amendments are explained hereunder:

The debt securities sold at a bank’s counters give rise capital gains, but there has been no mechanism of withholding tax on such gains and in many reported instances the gain was being declared by the sellers in their tax returns.

To prevent the revenue loss and capture the tax base on account of capital gains arising to the seller of debt security sold over the bank counter, all custodian of the debt securities including banking companies holding any investment portfolio through Investor Portfolio Securities (IPS) account have been declared as withholding agent to collect advance tax on account of income arising from capital gains at the rate of 15% at the time of disposal of securities and deposit the same in to government treasury.

The capital gain arising to the seller of debt securities will be computed as differential of the cost of acquisition and the price at which the debt securities have been disposed of.

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