Gain on sale of Shares section 37A
Gain on sale of Shares section 37A: S.R.O. 776(I)/2023.- In exercise of the powers conferred by sub-section (1) of section 237 of the Income Tax Ordinance, 2001 (XLIX of 2001), the Federal Board of Revenue is pleased to direct that the following further amendments shall be made in the Income Tax Rules, 2002, the same having been previously published vide Notification No. S.R.O.640(I)/2023 dated the 31st May, 2023, as required by sub-section (3) of section 237 of the said Ordinance, namely:-
In the aforesaid rules,-
(1) in rule 13N, in sub-rule (3A), after the expression “Notwithstanding the” the expression “provisions of the second proviso to sub-section
(1) of section 37A and” shall be inserted;
(2) in rule 19H, –
(i) in sub-rule (1),-
(a) after the word “of”, occurring for the first time, the expression “sub-section (7) of section 37 and” shall be inserted;
(b) in clause (b), the word “and” shall be omitted;
(c) in clause (c), for the full stop at the end the expression “; and” shall be substituted; and
(d) after clause (c) amended as aforesaid, the following new clause shall be added, namely: –
“(d) fair market value of shares for the purposes of subsection (7) of section 37.”;
(3) after sub-rule (6), the following new sub-rules shall be added, namely:-
“(7) For the purpose of determining fair market value of shares under sub-section (7) of section 37, component D in the formula in clause (c) of sub-rule (2) shall be taken as zero.
(8) State Bank of Pakistan shall not allow transfer or registration of repatriable shares unless prescribed certificate from the Commissioner, to the effect that the tax liability under sub-sections (6) to (10) of section 37 is discharged, is provided by the person selling the shares.”;
(4) after rule 19H, amended as aforesaid, the following new rule shall be inserted, namely: –
“19I. Application of this rule. – (1) This rule applies for the purposes of second proviso to sub-section (1) of section 37A.
(2) Section 37A shall not apply to the disposal of shares of listed companies otherwise than through registered stock exchange and which are not settled through NCCPL.
(3) For the purposes of second proviso to sub-section (1) of section 37A, “shares of a listed company” shall not include units of a mutual fund or collective investment scheme or a REIT scheme or derivative products and provisions of section 37A shall remain applicable on disposal of such units, schemes or products.
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