June 15, 2003	Sunday	Rabi-us-Sani 14, 1424

ISLAMABAD, June 14: The federal government has incorporated in the Finance Bill, 2003 a number of tax concessions proposed by the Securities and Exchange Commission of Pakistan with a view to stimulating investment in capital market, SECP Chairman Abdul Rehman Qureshi stated here on Friday.

These include: (i) Capital gains arising out of investment in listed companies are presently exempt up to June 2004. This period has been extended up to tax year 2005;

(ii) profit accruing on non-performing loans and advances was permissible as a deduction from income in case of banking companies. This facility has now been extended to NBFCs similarly placed, i.e. leasing companies, investment banks and modarabas;

(iii) NIT and ICP were exempt from withholding tax deduction on dividends, profit on debt and brokerage or commission under sections 150, 151 and 233 of the Income Tax Ordinance, 1979. This facility has been extended to Modarabas’ and NBFCs’ approved schemes;

(iv) in computing income of a person chargeable to tax under “income from property” deduction was allowed on account of share in rent paid to HBFC. To facilitate private sector housing companies, this concession has been extended to private sector housing finance companies approved by the SECP; and

(v) tax credit was allowed to an assessee on insurance premium paid during the year for an amount of premium which was lower of 5 per cent of total income or Rs100,000. To facilitate savings for the rainy day, the limit has been increased to lower of 10 per cent or Rs200,000. Salaried people will be benefited by this change besides some facilitation for insurance companies.

The SECP chairman also unveiled a number of amendments of significant nature in the Securities and Exchange Ordinance, 1969 (SEC Ordinance) and Securities and Exchange Commission of Pakistan Act, 1997 (SECP Act).

One of these, Qureshi stated, was aimed at operationalizing the Commodity Exchange established at Karachi about a year ago. For this purpose, the SEC Ordinance has been amended as follows: (i) A new section 32D has been inserted exclusively for the regulation of the business of “Commodity Exchange”. (ii) The Forward and Futures Contracts being a prominent feature of the trade in Commodity Exchange have been recognized as security, which would now be traded in the market like other securities i.e. shares, debentures and TFCs. (iii) In sub-section (2) of section 8 of the Ordinance, a delisted security can be traded for a specified period to provide opportunity to the investors for disinvestment of their shareholdings.