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The document discusses capital gains tax in Pakistan. It explains that gains from the disposal of capital assets are considered capital gains and taxed under the capital gains tax head. Only gains are taxable, losses can be deducted. It provides examples of how to calculate capital gains and losses in normal, zero, and reduced gain situations. It also discusses how bonus shares received are valued for capital gains tax purposes, using an example to illustrate how the cost is spread over the total number of original and bonus shares.
The document discusses capital gains tax in Pakistan. It explains that gains from the disposal of capital assets are considered capital gains and taxed under the capital gains tax head. Only gains are taxable, losses can be deducted. It provides examples of how to calculate capital gains and losses in normal, zero, and reduced gain situations. It also discusses how bonus shares received are valued for capital gains tax purposes, using an example to illustrate how the cost is spread over the total number of original and bonus shares.
The document discusses capital gains tax in Pakistan. It explains that gains from the disposal of capital assets are considered capital gains and taxed under the capital gains tax head. Only gains are taxable, losses can be deducted. It provides examples of how to calculate capital gains and losses in normal, zero, and reduced gain situations. It also discusses how bonus shares received are valued for capital gains tax purposes, using an example to illustrate how the cost is spread over the total number of original and bonus shares.
Concept Gain on the disposal of capital asset is considered as “Capital Gains” and Is taxable under the Head “Capital Gains”
Q: Is sale of Capital assets taxable ?
A: No. only gains are taxable and losses are deductable Overview (pg 180) Computational Formulae Consideration > Cost Normal Gain Situation Example 11.1 Zero Gain Situation Please answer Q2 (a) (i) March 2007 Reduced Gain Situation Example 11.2 Overview (pg 181) Capital Loss Consideration < Cost Disallowed Capital Losses (Exceptions) Please answer Q6 (a) March 2007 Bonus Shares (pg 182) What are bonus shares ? Please write down the double entry for them Are they income as per IT Ordinance 2001 of shareholders ? Problem with valuation of bonus shares They are given free of cost to share holders How to calculate cost of bonus shares at time of disposal of shares ? Example: Valuation of Bonus Shares Ex: 10,000 shares of a private company of face value of Rs.10 each were purchased @Rs.15 per share. 2000 bonus shares were received and total 12,000 shares were sold @Rs.16 per share.
Compute the gain / loss arising from the
above transaction ? Rule In respect of valuation of bonus shares for determination of capital gains, it has been held by Supreme Court that The cost of the old shares Would be spread over the Total number of shares including bonus shares Value per share = Cost of Shares / Total No. of Share Answer Particulars Original Shares Bonus Shares Total
Sales 160,000 32,000
Proceeds@16
Cost of Acquisition
150,000 / 125,000 25,000
12,000 = 12.5 per share
Capital Gain 35,000 7,000 42,000
Exemptions Gain on sale of shares of Public Company Gain on sale of membership right or shares of a stock exchange in Pakistan along with a room in the stock exchange transferred by an individual to a company