Karachi, February 27, 2025 – The collection of capital gain tax has witnessed an extraordinary surge of 82% during the first seven months (July – January) of the fiscal year 2024-25, according to provisional data from the Federal Board of Revenue (FBR).
This remarkable growth underscores the increasing role of capital markets in revenue generation.
Sources within the FBR disclosed that the collection of capital gain tax escalated to Rs 15.73 billion in the first seven months of the current fiscal year, compared to Rs 8.66 billion during the corresponding period of the previous fiscal year. This sharp rise reflects heightened investor participation and improved market sentiment.
The collection was made under Section 37A and Section 147 (5B) of the Income Tax Ordinance, 2001, which govern the taxation of capital gains derived from securities transactions. The FBR sources attributed this significant boost in capital gain tax collection to the notable buoyancy in the stock market, driven by increased trading volumes and investment activity.
Officials pointed out that the record-breaking performance of the Pakistan Stock Exchange (PSX) played a crucial role in driving up capital gain tax receipts. The benchmark KSE-100 index reaching an all-time high has spurred investor enthusiasm, leading to increased capital transactions and subsequent tax collection.
As per Section 37A, capital gain arising from the disposal of securities on or after July 1, 2010, except those exempt from tax, shall be chargeable at the rates specified in Division VII of Part I of the First Schedule. This regulation ensures that gains from capital investments contribute to the national tax base.
However, certain exemptions apply under this section. Specifically, the provisions do not extend to banking and insurance companies. Additionally, disposals of shares in a listed company made outside a registered stock exchange, or those not settled through the National Clearing Company of Pakistan Limited (NCCPL), are also excluded. Similarly, shares disposed of through an initial public offer during the listing process are exempt unless details are provided to NCCPL for computation of capital gains tax.
The significant increase in capital gain tax collection highlights the impact of strong stock market performance on fiscal revenue. With continued market growth and investor confidence, the capital gain tax collection is expected to remain robust in the coming months, further strengthening government revenue streams.
