NBR changes mode of payment by listed cos

The brokerage houses will deduct tax at a rate of 10 per cent from the income to be gained from securities by listed companies and firms, the NBR has said.
In a circular, issued on August 18, the National Board of Revenue (NBR) changed mode of payment by the listed companies and firms from the current fiscal year (FY).
The SRO came into effect from July 1, 2014.
The NBR also kept 5.0 per cent capital gain tax unchanged for sponsor shareholders and shareholder directors of banks and financial institutions and different intermediaries of stock markets.
In the budget proposal for 2014-15, the Finance Minister had scrapped the earlier Statutory Regulatory Order (SRO), issued in 2010, on tax measures for stock market share holders with the imposition of tax on individual investors.
Later, the government backtracked from the move to impose capital gain tax for individual shareholders through the Finance Act-2014 on June 28.
Following the shift in decision, the tax issues for sponsor share holders and other turned quite complex.
A senior tax official said after scrapping the SRO of 2010 sponsor share holders and shareholder directors of banks and financial institutions were automatically included in regular 15 per cent capital gain tax slab.
Also, shareholders who hold more than 10 per cent share of paid-up capital of a company came under 15 per cent capital gain tax.  
To resolve the confusion, the NBR issued the SRO by clarifying that the shareholders would have to pay 5.0 per cent tax on their income from securities like last year.
Transactions of securities, stocks, share, mutual fund, bond and debenture, except government ones, at the stock markets in the country would have to pay the 5.0 per cent tax that they are enjoying since 2010.
The benefit was left out as the revenue board had cancelled the related SRO.
According to the new SRO, sponsor shareholders and directors of banks, financial institutions, merchant banks, insurance companies, leasing companies, portfolio management companies, stock dealer or stock broker companies will have to pay tax at the rate of 5.0 per cent on income derived from share transactions at capital markets.
For, other shareholders, except sponsor shareholders and shareholder directors, who hold more than 10 per cent of paid-up capital of listed companies at any time of the FY will have to pay the tax at reduced rate 5.0 per cent.
 However, the SRO made it clear that individual investors in the capital markets were exempted from paying tax on their capital gain.