Capital Gains :-
It is the fourth important source of income. Such income is
chargeable under the head capital gains.
Meaning : Any profits or gains arising from the transfer of
capital asset is called capital gains.
Such income is also chargeable to tax.
Capital Asset :-
Any kind of property held by the person is called capital
asset. Such property may be connected with his business or not.
Example :
(i). Shares of companies.
(ii). Modarba certificates.
(iii). Musharika certificates.
(iv). Leasehold rights.
(v). Patent and copy rights.
(vi). Term finance certificate.
(vii). PTC vouchers.
Procedure Of Computing The Capital Gains :-
When the capital assets is disposed off by the person, then
capital gain is computed according the following procedure.
Capital asset is disposed off with in 12 months of its
acquisition.
Formula : Consideration received on the disposed of the
asset the cost of asset.
Balance = Gain/Loss
Explanation :
(i). The assets fair market value on the date of its
transfer is treated cost of the assets.
(ii). Expenditure on the disposal of assets is included in
the cost.
Note : Following assets are not included in the cost of
asset.
(i). Expenses of a person which are allowed as deduction
under any other provision of the ordinance.
(ii). Expenses which are not spent for the disposal of
assets.
Disposal After 12 Month :-
When the capital asset is disposed off after 12 month of the
acquisition then 75% of the actual gain is taken for income.
Deduction Of Capital Losses :-
Under the head capital gains when we compute the income
chargeable to the tax the losses on disposable of capital asset shall be
treated as under.
(1). Capital loss shall be deducted from the capital gain
received on the disposal of any other asset.
(2). If capital gain is not chargeable to tax then no loss
should be deducted on the disposal of the capital asset.
(3). On the disposal of the following capital asset no loss
should be recognized.
(i). Jewelry.
(ii). An Antique.
(iii). A coin.
(iv) A painting.
(v). A work of art.
(vi). A postage stamp.
(4). On the disposal the disposal of any.
Exemptions :-
In the following cases capital gain is not included in
taxable income.
(i). Income from the sale of Modarba certificates.
(ii). Shares of public company.
(iii). PTC vouchers derived by any ending.
(iv). If any foreign investor derives capital gain by
selling the shares of public company which are approved by the Federal govt. is
exempt from tax.
(v). Industrial undertaking set up in a special industrial
zone declared by the federal govt. is exempt from tax 5 years.
(vi). Capital gain derived from an industrial under taking
set up in export processing zone is exempt from tax.
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