The Federal Board of Revenue (FBR) on Tuesday issued draft rules for tax treatment on capital loss on disposal of listed securities. The FBR issues SRO 639(I)/2021 to make amendments in Income Tax Rules, 2002. As per the draft amendment, the FBR proposed substitution in sub-rule (3) of Rule 13D of the Income Tax Rules, 2002. According to the proposed amendment: “Capital loss arising on disposal of listed securities in tax year 2019 and onwards that has not been set off against the gain of the person from disposal of listed securities chargeable to tax during the tax year shall be carried forward to the following tax year and set off only against the gain of the person from disposal of listed securities chargeable to tax but no such loss shall be carried forward to more than three tax years immediately succeeding the tax year for which the loss was first determined.” In Rule 13N, the FBR proposed substitution in sub-rule (7), as: “Capital loss arising on disposal of listed securities in tax year 2019 and onwards that has not been set off against the gain of the person from disposal of listed securities chargeable to tax during the tax year shall be carried forward to the following tax year and set off only against the gain of the person from disposal of listed securities chargeable to tax but no such loss shall be carried forward to more than three tax years immediately succeeding the tax year for which the loss was first determined.” The FBR proposed a new sub-rule after the sub-rule 7, which says: Capital loss arising on disposal of listed securities in tax year 2019 and onward shall be carried forward to a subsequent tax year for setting off, in the manner prescribed as follow: (a) The setting off of eligible capital loss carried forward from previous tax year(s) shall be made by National Clearing Company of Pakistan Limited (NCCPL) under this rule, only in respect of a taxpayer whose name appear or appeared in the Active Taxpayers List (ATL) pertaining to the tax year to which such loss pertains as witnessed by the ATL available on FBR’s website after updation for the tax year to which such loss pertains; (b) adjustment of carried forward capital loss(es) shall be made on monthly basis by the NCCPL from the first month of updation of ATL for the tax year and on first-in first-out (FIFO) basis; (c) The NCCPL may requisition date wise position of ATL in respect of particular taxpayer from Information Technology (IT) Wing of the FBR as and when required; (d) At the end of relevant tax year, NCCPL shall maintain tax year-wise balance of unexpired carried forward capital losses separately identifiable for computation of limitation period for each tax year; and (e) The manner of adjustment of capital loss carried forward from previous tax years will be in accordance with illustration given in clause (zf) of Rule 13P.