FBR revises capital gains tax provisions for securities held through foreign currency and non-resident accounts, strengthening tax collection requirements.
ISLAMABAD: The Federal Board of Revenue (FBR) has introduced changes to the capital gains tax framework covering securities transactions and investments held through foreign currency and non-resident accounts.
The FBR issued Income Tax Circular No. 2 of 2026-27, explaining major amendments to the Income Tax Ordinance, 2001 introduced through the Finance Act, 2026.
Changes to Section 100B
Under amendments to Section 100B, references to a non-banking finance company in clause (b) of sub-section (2) have been omitted, along with clauses (c) and (d) of the same sub-section.
The changes extend the application of special provisions under Section 37A, read with the rules contained in the Eighth Schedule, to capital gains arising from the disposal of securities by a non-banking finance company, a modaraba and a company in respect of debt securities.
A new sub-section (3) of Section 100B has also been introduced covering mutual funds, banking companies and insurance companies.
Under the new provision, the National Clearing Company of Pakistan Limited (NCCPL) will compute and determine the capital gain for these entities according to the mechanism prescribed under Section 37A.
However, mutual funds, banking companies and insurance companies will continue to deposit tax on capital gains in accordance with the applicable provisions of the Income Tax Ordinance, 2001.
Tax deduction on foreign currency accounts
The FBR has also revised sub-section (1DA) of Section 152, introducing specific tax deduction requirements for banks maintaining certain foreign currency and non-resident accounts.
Under the substituted provision, every banking company maintaining a Foreign Currency Value Account (FCVA), Foreign Currency Business Value Account (FCBVA), Non-Resident Rupee Value Account (NRVA) or Non-Resident Rupee Business Value Account (NRBVA) will be required to deduct tax from capital gains arising from the disposal of specified financial instruments.
The requirement applies to capital gains arising from the disposal of debt instruments, government securities and certificates, including their Shariah-compliant variants, where these are invested through the specified accounts.
Tax will be deducted at the rate prescribed under Division II of Part III of the First Schedule to the Income Tax Ordinance, 2001.
FBR strengthens capital gains tax administration
The amendments form part of broader changes introduced through the Finance Act, 2026 to strengthen the collection and administration of tax on capital gains from securities and financial investments.
The revised framework also clarifies the role of NCCPL and banking companies in determining and collecting tax on capital gains associated with specified securities and accounts.