Capital Gains Chapter- 12
Example: From the following information provided by Mr. Hamid, compute income chargeable
to tax under the head “capital gains”. (Ignore holding period of the assets)
(a) Profit on sale of finished goods Rs. 100,000.
(b) Gain on sale of jewellery Rs.50,000.
(c) Gain on sale of personal car Rs. 350,000.
(d) Gain on sale of Antique Rs.10,000
Solution:
Mr. Hamid
Computation of taxable income and tax liability:
Capital gains: Rs.
Gain on sale of jewellery 50,000
Gain on sale of antique 10,000
Taxable income 60,000
Note: Item (a) and (c) have not been considered, as the same are not capital assets.
1.2 Capital assets u/s 37A:
Under this section capital assets are termed as securities. Securities include the following:
Shares of a public company,
For the purpose of this section, "shares of a public company“ shall be considered as
security if such company is a public company at the time of disposal of such shares.
Voucher of Pakistan Telecommunication Corporation,
Unit of exchange traded fund,
Modarba Certificate, An instrument of redeemable capital: defined in the Companies Ordinance, 1984
includes finance obtained on the basis of participation term certificate (PTC), musharika
certificate, term finance certificate (TFC), or any other security or obligation not based on
interest, other than ordinary share of a Company, representing an instrument or a
certificate specified denomination, called the face value or nominal value, evidencing
investment of the holder in the capital of the company on terms and conditions of the
agreement for the issue of such instrument or certificate or such other certificate or
instrument as the Federal Government may, by notification in the official Gazette, specify
for the purpose.
Debt securities means;
(a) Corporate debt securities such as TFC’s, Sukuk Certificates (Sharia Compliant
Bonds), registered bonds, commercial paper, PTC’s and all kinds of debt
instruments issued by any Pakistani or foreign Company or corporation registered in
Pakistan; and
(b) Govt. debt securities such as treasury bills (T-bills), Federal Investment Bonds
(FIB’s), Pakistan Investment Bonds (PIB’s), Foreign Currency Bonds, Govt. papers,
Municipal Bonds, infrastructure Bonds and all kinds of debt instruments issued by
foreign Govt., Provincial Govt, local authorities and other statutory bodies.”
Derivative products: Derivative products means a financial product which derives its
value from the underlying or other asset, may be traded on a stock exchange of Pakistan
and includes deliverable future contracts, cash settled future contracts, contracts of rights
and options.
Explanation: For removal of doubt it is clarified that derivative products include future
commodity contracts entered into by the members of Pakistan Mercantile Exchange
whether or not settled by physical delivery.