Inefficient tax collection in capital market; Office of Auditor General publishes 55th annual report emphasizing on no VAT discount on broker commission

Amongst a program held at Office of Auditor General, Babar Mahal, special comments were made on Ministry of Finance (MoF) and their performance, current tax policies for capital market and others.

Office of Auditor General has commented on MoF’s inability to expand the horizon of capital market and Insurance industry. They have also pointed that the revenue collection hasn’t been very effective and the tax regulations aren’t being followed genuinely.

During the program, the announcement was made that the broker’s commission in Stock Market isn’t eligible to enjoy VAT discount. In regards with the same, Office of Auditor General has emphasized that the VAT amount should be collected from the stock market. According to the 55th annual report published, the Office of Auditor General has stated that such provision isn’t allowed.

Based on the statistics shown by Office of Auditor General, the said tax on broker’s commission amounts to Rs 16 crore 62 lakh.

In the same program, it was also emphasized that the trend of evading Capital Gain Tax is also increasing and strict corrective measures should be taken immediately. The Office of Auditor General also revealed that they have found instances where the buyers and sellers have used the market price instead of adjusted price after bonus and rights issue to calculate their tax. Office of Auditor General stated that in the fiscal year 2072/73 in regards to this issue, people have already evaded Rs 77 crore 95 lakhs in ordinary shares and Rs. 28 crore 70 lakh in promoter shares.

Thus, in total by using the unadjusted market price, the National reserve has gone under by Rs. 9 arba 6 crore 65 lakh.