Capital Gains

What can be added to cost

Sections 37(2), 37(4) and 76; Rule 31(3)

Price paid (including fair value of anything given in kind).
Incidental costs of buying AND selling: e.g. brokerage, commission, stamp duty, registration and transfer fees, legal fees.
Costs of altering or improving the asset.
Not allowed: amounts already deducted elsewhere, amounts disallowed under section 21, and grants or subsidies received for the asset.
Rule 31(3) requires you to keep evidence of the cost of acquiring the asset, of every other cost claimed, and of the sale consideration.

What your team should check (5)

Is the purchase price supported by a sale deed / contract and payment proof?
Are incidental costs of acquisition and disposal supported by receipts?
Are improvement costs supported by bills?
Have amounts already deducted under another provision, or covered by section 21, been excluded from cost?
Have grants / subsidies relating to the asset been deducted from cost?

Keep on file: Purchase deed, payment proof, receipts for incidental costs

Section 76(8A) and section 79

Inherited immovable property: cost is its fair market value (FBR / DC valuation) when transferred to you.
Assets received by gift from a relative, by inheritance or under a will are generally not treated as a sale; check section 79 for how cost carries over.

What your team should check (2)

For inherited immovable property, has cost been taken at fair market value on transfer to the heir?
Is the succession / gift deed and valuation evidence on file?

Keep on file: Succession certificate, FBR / DC valuation

Sections 38 and 59

A capital loss offsets capital gains only (not salary, business or other income).
Unused capital loss can be carried forward for 6 years against future capital gains.
No loss allowed if a gain on that asset would have been exempt.
No loss at all on: paintings and art, jewellery, rare manuscripts / books, stamps, coins / medals, antiques.

What your team should check (4)

Has the loss been set off only against capital gains?
Would a gain on this asset have been taxable (i.e. not exempt)?
Have losses on art, jewellery, manuscripts, stamps, coins and antiques been excluded?
Is the carry-forward within the 6-year limit, oldest loss first?

Keep on file: Loss computation, prior returns

Section 37A; Rules 13A-13M

Securities include shares of public companies, mutual fund / ETF units, modaraba certificates, TFCs, sukuks, government debt securities and derivatives.
Gain = sale price minus cost of acquisition, worked out on a First-In-First-Out (FIFO) basis; taxed as a separate block (usually computed by NCCPL) (Rule 13D).
Special costs (Rule 13L): right shares at the discounted issue price plus cost of the letter of rights; inherited / bequeathed shares at the price the deceased paid; bonus shares at ex-bonus price or the value taxed under section 236M / 236N (otherwise zero); IPO shares at the price paid to the issuer.
Losses offset only gains on other securities; unused loss carries forward 3 years.
Losses are NOT allowed on wash sales (sell at a loss and buy back within a month), cross trades between related accounts, or tax-swap sales into a similar security (Rule 13F).
Investors other than individuals must e-file a quarterly statement of advance tax on capital gains within 21 days of each quarter end (Rule 13H).

What your team should check (7)

Has the NCCPL capital gains statement been obtained and reconciled?
Has the gain / loss been computed on FIFO basis, with special cost rules applied to right, bonus, inherited and IPO shares?
Have losses from wash sales, cross trades and tax-swap sales been excluded?
Have securities losses been set off only against securities gains?
Is any carried-forward securities loss within the 3-year limit?
Are broker bills, broker ledger statements, CDC statements and proof of bank payments kept as evidence of each purchase and sale (Rules 13A, 13B, 13I)?
(Non-individual investors) Were quarterly capital gains statements e-filed within 21 days of each quarter end?

Keep on file: NCCPL statement, broker bills and ledgers, CDC statements, bank proof

A buyer of shares of a company under section 37(6) must deduct 10% advance tax on their fair market value; the seller must furnish the prescribed details to the Commissioner within 30 days (section 37(6) to (10)).
Advance tax collected at property transfer / registration (sections 236C / 236K) is generally adjustable against your final tax, but is a final discharge for certain persons; check the section for your case.