Tax Book 2023

Capital Gains Chapter- 12

 There shall be no tax if the securities are held for more than one year;

 This section shall not apply to a banking company or an insurance company;

 The holding period shall reckon from the date of acquisition to the date of disposal;

 Gain under this section shall be treated as a separate block of income.

Payment of tax on capital gain [Rule 13H]

 Every investor other than individual shall e-file statement of advance tax on capital gain on the

capital gain on the prescribed format within twenty one ( 21 ) days after the end of each quarter

with the tax authority.

 The liability to pay the due tax on capital gain shall lie on the investor who held the securities

during the period for which tax on capital gain is to be paid.

Example: Compute tax payable by Mr. Sabir for the tax year 20 23 from following information:

Rs.

Gain on sale of shares of Omega Limited (Listed Company) 35,400

(Holding period is less than 6 months)

Loss on sale of shares of Delta Limited (Listed Company) (65,000)

(Holding period is equal to 12 months)

Solution:

Mr. Sabir

Tax year 20 23

Computation of taxable income and tax liability:

Rs.

Gain on sale of shares of Omega Limited 35,400

Less: Loss on sale of shares of Delta Limited 65,000

Unadjusted loss on sale of securities (29,600)

No tax is payable by Mr. Sabir as there is loss under separate block of income.

Note: The unadjusted loss on sale of security shall be carry forward for subsequent three tax years

for adjustment against gain on disposal of securities chargeable to tax.

Example: Compute tax payable by Mr. Jamil for the tax year 20 23 from following information:

Rs.

1. Gain on sale of shares of Omega Limited (Listed Company) 20,000
   (Holding period is less than 12 months)


2. Gain on sale of shares of Apex Limited (Listed Company) 20,000
   (Holding period is equal to 12 months)


3. Gain on sale of shares of Zelda Limited (Listed Company) 20,000
   (Holding period is more than 72 months)


4. Loss on sale of shares of Delta Limited (Listed Company) 20,000
   (Holding period is more than 12 months but less than 24 months)
   Solution: Taxpayer has the option to adjust the loss on sale of security against gain on sale of any
   security chargeable to tax during the year. The gain on sale of shares of Zelda Limited is not
   chargeable to tax because of its holding period. However capital loss on sale of Delta Ltd. shall be
   firstly adjusted against the gain of Apex Ltd and finally the gain of Omega Ltd. shall be charged tax at
   15 %.
   Explanation of section 37A