Payment of capital gain tax: Individual taxpayers to prove their case

Individual investors will be responsible for settling the payment of capital gain tax if their profits exceed Tk 5 million.

The tax rate is fixed at 15 per cent on the excess amount earned from transactions of shares that the investor has held onto for five years or more. But if the shareholding duration is less than five years, the tax rate will be determined by the tax slabs fixed for individual taxpayers.

The excess capital gain will be added to the taxpayer's income from other sources, salary and rent for example, in the fiscal year involved.

Individual taxpayers or their lawyers on their behalf will have to explain their case in their tax file submitted to the National Board of Revenue, said Md Shakil Rizvi, managing director of Shakil Rizvi Stock Ltd.

If the taxpayer decides to pay 15 per cent tax, he/she will have to prove that he has kept the assets for 5 years or more; they will have to provide the NBR with supporting documents and show that he has received dividends over the five years' time.

The parliament passed the Finance Bill 2024 on Saturday, imposing capital gain tax on individual investors for the first time. Until now, enterprises and sponsor-directors were required to pay capital gain tax at a rate of 15 per cent and 10 per cent respectively, which remain unchanged for FY25.

Ahsan H Mansur, executive director at the Policy Research Institute, told The FE that the collection of capital gain tax should be automated.

"Otherwise, there will be low collection."

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