DEDUCTION OF CAPITAL LOSSES

In computing the income of a person chargeable to tax under the head “capital gains”, the losses on disposal of capital asset shall be treated according to the following procedure:

Any loss on the disposal of a capital asset by the person during the year shall be deducted from the capital gain.

2. No loss shall be deducted on the disposal of the capital asset where a gain on the disposal of asset is not chargeable to tax.

3. The loss arising from the disposal of a capital asset shall be computed according to the following formula:

A-B

A is the cost of the asset; and

B is the consideration received by the person on disposal of

the asset.

4. In case of ‘A’ the following expenses shall not be included in the

cost of the asset:

(a) Any expenditure incurred by a person that is allowed as deduction under any other provision of the Income Tax Ordinance.

(b) Any expenditure incurred by a person that is not wholly and exclusively in connection with the disposal.

5. No loss shall be recognized under the Income Tax Ordinance, 2001, on the disposal of the following capital assets, namely:

(a) A painting, sculpture, drawing, Dfa Ho or other work of art;

(b) Jewellery,

(c) A rare manuscript, folio or book;

(d) A postage stamp or first day cover; (e) A coin or medallion; or

S An antique.