Pakistan Capital Gains Tax Guide 2026

Overview — Capital Gains Taxation in Pakistan

Capital gains in Pakistan are taxed differently depending on the asset class. Gains on listed securities (shares, mutual funds, ETFs) have a separate CGT regime with preferential rates. Gains on immovable property are included in total income and taxed under the standard IIT slab rates (0–45%). The FBR has progressively tightened the CGT regime to reduce speculation and broaden the tax base. The tax year runs from 1 July to 30 June.

CGT on Securities — 12.5% (Long-Term) / 15% (Short-Term)

Capital gains on the disposal of listed securities (shares of companies listed on the Pakistan Stock Exchange, mutual funds, and ETFs) are subject to a separate CGT regime:

• Long-term gains (holding period > 1 year): 12.5% of the gain
• Short-term gains (holding period ≤ 1 year): 15% of the gain

The holding period is calculated from the date of purchase to the date of sale. Securities acquired before 1 July 2013 have grandfathering provisions. The CGT is a final tax for individual taxpayers — meaning the gain is not included in total income and is not subject to further IIT. Losses on securities can be carried forward for up to 3 years and set off against future capital gains from securities.

CGT on Immovable Property

Capital gains from the sale of immovable property are not subject to the separate securities CGT regime. Instead, gains are included in the taxpayer's total income and taxed at the progressive IIT slab rates (0–45%). However, indexation relief is available for property held for more than one year, which adjusts the cost basis by the Consumer Price Index (CPI), significantly reducing the real gain. For property held for less than one year, no indexation applies. Non-filers face a higher effective rate through withholding on gross consideration.

Exemptions and Special Rules

Several exemptions and special rules apply to capital gains:

• Primary residence: Gains on the sale of a single personal residence may be exempt under certain conditions (one property per lifetime)
• Agricultural land: Gains from agricultural land in certain cases may be exempt
• Inherited assets: Cost basis is the fair market value at the time of inheritance; no inheritance tax applies
• Gifts: No capital gains tax on gifting securities or property (but gift tax may apply on property gifts in certain provinces)

Withholding Tax on Securities Transactions

The Pakistan Stock Exchange (PSX) operates a computerized withholding tax system on securities transactions. The Capital Value Tax (CVT) on purchase of securities is 0.02% of the consideration for filers and 0.06% for non-filers. Additionally, the FBR collects advance tax on sale proceeds. These collections are adjustable against the final CGT liability at year-end.

FAQs

How is the holding period calculated for securities?

The holding period is the number of days between the purchase date (settlement date) and the sale date (settlement date) as recorded by the Central Depository Company (CDC). Holding periods of 365 days or less are classified as short-term.

Can capital losses be offset against other income?

No, capital losses on securities can only be offset against capital gains on securities. Unutilized losses can be carried forward for up to 3 tax years. Losses on property can be offset against property gains but not against other income.

Are mutual fund redemptions subject to CGT?

Yes, gains on the redemption of mutual fund units are treated as capital gains on securities and subject to the same CGT rates (12.5% long-term, 15% short-term). The fund manager reports these transactions to the FBR.

Disclaimer

This guide provides general information about Pakistan capital gains tax for tax year 2026. Tax rates and rules are subject to change through the Finance Act. Always consult with a qualified tax advisor in Pakistan for advice specific to your situation. InvestmentKit does not provide tax advice.