Dear Investor,
This is to inform you that according to Finance Act 2010, Capital Gains Tax (CGT) has been imposed on sale of securities by insertion of Section 37A to the Income Tax Ordinance, 2001. This will also apply on the units of all types and categories of collective investment schemes. Hence, Capital Gains Tax (CGT) shall be applicable on any gains earned by an investor of Al Meezan funds’ at the rates specified in Division VII – Part I of the First Schedule of the Income Tax Ordinance, 2001. The rate of tax applicable is given below;
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Holding Period
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Tax Rate (%)
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Less than 6 months
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10%
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More than 6 months but less than 12 months
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7.5%
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More than 12 months
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0%
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Based on currently available information, Capital Gain is the excess amount received by the unit holder on redemption / transfer / conversion / merger of units over the cost of the units redeemed. The detailed rules from FBR on this are still awaited.
According to the Finance Act 2010, Asset Management Companies have been given the responsibility to withhold capital gains tax at source at the above-mentioned rates on redemption / transfer / conversion / merger of units. In compliance with this statutory requirement, all Open end Funds managed by Al Meezan are liable to deduct and collect tax on any capital gain made on aforesaid transactions of units. Furthermore, any capital losses accrued during the tax year can be adjusted against gains earned in the same year by the investors.
In case of any query please contact us at (9221) 111 MEEZAN (633926) or email us at info@almeezangroup.com.