Law: Constitution of Pakistan, 1973

Section: 199

Law: Income Tax Ordinance, 2001

Section: 37A,DivisionVIIofPartIofFirstSchedule

CIT v. Shahnawaz 1993 SCMR 73; Gulistan Textile Mills v. Collector (Appeals) 2010 PTD 2148; CIT v. BRR Investments 2011 PTD 2148; Kurdistan Trading Company v. C.I.R. 2014 PTD 339; China Harbor Engineering Company v. FoP 2016 PTD 427; Super Engineering and another v. CIR 2019 SCMR 1111; Member BOR Punjab and others v. Qaisar Abbas and others 2019 SCMR 446; Zila Council Sialkot v. Abdul Ghani and others PLD 2004 SC 425; CIR v. Trillium Pakistan (Private) Limited 2019 SCMR 1643 and Government of Sindh v. Khan Ginners (Private) Limited and others PLD 2011 SC 347 rel. JUDGMENT AGHA FAISAL, JUSTICE:---.--- The issue agitated before us in the present petitions pertains to the substitution of Division VII (Division VII) of Part 1 of the First Schedule of the Income Tax Ordinance 2001 (Ordinance) vide the Finance Act 2016 (FA 2016). The crux hereof is whether the substitution culminated in the deletion of the provisos in Division VII; hence, providing a. lower incidence of taxation inter alia in respect of debt securities and investments in mutual funds. It is considered illustrative to reproduce the relevant pre amendment provision of the law as well as the text of the substitution carried out vide the FA 2016. Pre FA 2016 DIVISION VII S. No. Period Tax Year 2015 Tax Year 2016 1. Where holding period of a security is less than twelve months 12.5% 15% 2. Where holding period of a security is twelve months or more but less than twenty four moths 10% 12.5% 3. Where holding period of a security is twenty four months or more but less than four years 0% 7.5% 4. Where holding period of security is more than four years 0% 0% Provided that the rate of Companies shall be as specified in Division II of Pan I of First Schedule, in respective of debt securities; Provided further that a mutual fund or a collective investment scheme or a REIT scheme shall deduct Capital Gains Tax at the rates as specified below, on redemption of securities as prescribed, namely:- Category Rate Individual and association of 10% for stock funds persons 10% for other funds Company 10% for stock funds 25% for other funds Provided further that in case of a stock fund if divided receipts of the fund are…

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