CDC asked to deposit stamp duty

Posted on 09.14.06 by StockPK Team @ 9:56 am    

Central Depository Company (CDC) was not providing required details of Deposit Transactions to the Board of Revenue, Government of Sindh, so that the amendments in the Stamp Act 1899 to cover electronic transactions be materialised.

In a prompt action, Board of Revenue asked CDC to recover the stamp duty and deposit the same under the head of “stamp duties” in the National Bank of Pakistan entitled branches in the larger national interest.

Chief Inspector of Stamps, Board of Revenue, Sindh, Karachi, in a letter addressed to the Muhammad Hanif Jakura, Chief Executive Officer of Central Depository Company (CDC) on September 09, 2006, said that he was not giving his response regarding the amendment in the Stamp Act 1899 to cover electronic transactions.

Some five letters had so far been sent to the chairman-CDC to date on different dates i.e. 17.08.2004, 29.12.2005, 10.03.2006, 29.04.2006 and 05.08.2006, but he maintained silence otherwise CDC management had assured the Board on more than one occasions for providing the required details of Deposit Transactions, letter said.

The amendments in the Stamp Act (Provincial Finance Act 2006), Board of Revenue, Government of Sindh, has levied 0.1 per cent tax on Electronic Transactions of shares in CDC otherwise stamp duty of 1.5 per cent on the face value on paper shares is in effect since long and there has been no problem with any once in the last 10 years.

Letter reads, “It may be borne in mind while evaluating the whole issue that the Stamp Act under Article 62-A (now 31) provide for stamp duty on transfer of shares to or through CDC at 0.1 per cent on face value since 1996. This rate is 15 times lower than that of the paper share transfer, and was agreed to in between the then Advisor to Chief Minister for Finance (Syed Asad Ali Shah) and the Stock Exchange / CDC Representatives.”

The letter from the MD-KSE interestingly states that “Since no such service or activity takes place in the context of share transfers executed electronically, therefore no tax can be justified,” this assertion by the MD is ironically at variance with the definition contained in Article 6(1) and 6(2) of the CDC Act 1996, letter said.

“Any person obstructs the chief inspector of stamps, board of revenue, or any person on his behalf in the discharge of his functions under this act, or conceals the correct information, as aforesaid in the Chief Revenue Authority may impose on such person, a penalty which may extend to twenty thousand rupees in case to obstructions and a penalty which may extend to twenty thousand rupees or fifteen per cent of the amount concealed whichever is more in the case of concealment to be recovered as arrears of land revenue,” letter said.

Source: The News