Federal Board of Revenue vide notification 801(I)/2021 dated June 24th, 2021, notified amendment in Income Tax Rules, 2002 as per following details.
INCOME TAX RULES 2002
Rule 13D Computation of capital gain or loss
Sub-rule (3) of Rule 13D is substituted to allow carry forward for capital losses arising on disposal of listed securities. Earlier Capital loss arising on disposal of securities in any tax year was not allowed carried to a subsequent tax year. After the change, capital loss arising on the disposal of listed securities in Tax Year 2019 and onwards that has not been set off against the gain of the person from disposal of listed securities chargeable to tax during the tax year shall be carried forward to subsequent year and can be set off only against gain from such listed securities and such loss can be carried forward to maximum three years immediately succeeding the tax year for which the loss was first determined.
Rule 13N Special procedures for computation of capital gains and collection of tax
Similarly, Sub-rule (7) of Rule 13N specifically provided that capital loss arising on disposal of listed securities in any financial year shall not be carried forward to a subsequent financial year.
Now this sub-rule has also been substituted to provide that capital loss arising on the disposal of listed securities in 2019 and onwards that has not been set off against the gain of the person from disposal of listed securities chargeable to tax during the tax year shall be carried forward to subsequent year and can be set off only against gain from such listed securities and such loss can be carried forward to maximum three years.
Sub-rule (7A) is also added in Rule 13N which prescribes the manner for carrying forward of capital loss.
- It states that setting off of eligible capital loss carried forward from previous year shall be made by NCCPL only is respect of a taxpayer whose name appears in ATL list pertaining to the tax year to which such loss relates.
- Adjustment of carried forward losses shall be made by NCCPL on monthly basis on FIFO method from the first month of updation of ATL.
- NCCPL shall maintain tax year wise balance of unexpired carried forward capital losses separately identifiable for computation of limitation period for each tax year.
- Illustration is also provided in rules to demonstrate the manner of adjustment of capital loss carried forward from previous tax years.
Rule 13O. Statements and forms
Format of annual certificate of capital gains to be issued by NCCPL to taxpayer under rule 1(4) of the Eighth Schedule to the Ordinance is substituted. It now includes provision for capital loss and brought forward losses as well.
13P. Clarifications and explanations
In Rule 13P after clause (ze) a new clause (zf) has been added which shows an illustration for adjustment of capital loss to be carried forward.