Updated CGT regime sets tax rates based on acquisition date, holding period and Active Taxpayers’ List status under the Finance Act, 2026
ISLAMABAD: The Federal Board of Revenue (FBR) has notified the Capital Gains Tax (CGT) rates applicable to the disposal of securities for Tax Year 2027 under the updated Income Tax Ordinance, 2001, incorporating amendments introduced through the Finance Act, 2026.
The revised tax framework, prescribed under Section 37A of the Income Tax Ordinance, sets different CGT rates based on the acquisition date of securities, the holding period, the taxpayer’s Active Taxpayers’ List (ATL) status and the type of security involved.
CGT rates for securities acquired between July 1, 2022 and June 30, 2024
For securities acquired between July 1, 2022 and June 30, 2024 (both dates inclusive), the applicable Capital Gains Tax will decrease progressively with longer holding periods.
| Holding Period | CGT Rate |
| Up to one year | 15% |
| More than one year but up to two years | 12.5% |
| More than two years but up to three years | 10% |
| More than three years but up to four years | 7.5% |
| More than four years but up to five years | 5% |
| More than five years but up to six years | 2.5% |
| More than six years | 0% |
The structure is intended to encourage long-term investment by gradually reducing the tax burden as the holding period increases.
Tax treatment for securities acquired on or after July 1, 2024
For securities acquired on or after July 1, 2024, the FBR has maintained a 15% Capital Gains Tax for taxpayers whose names appear on the Active Taxpayers’ List (ATL) on both the acquisition date and the disposal date.
For taxpayers not appearing on the ATL on either of those dates:
• Individuals and Associations of Persons (AOPs) will be taxed at the applicable rates prescribed under Division I of the First Schedule.
• Companies will be taxed under Division II of the First Schedule.
The FBR clarified that the Capital Gains Tax applicable to individuals and AOPs who are not on the ATL cannot be less than 15% under any circumstances.
Preferential rates retained for older investments
The updated ordinance also preserves concessional tax treatment for securities acquired before July 1, 2024.
Under the notified provisions:
• Securities acquired between July 1, 2013 and June 30, 2022 will remain subject to 12.5% CGT.
• Securities acquired before July 1, 2013 will continue to enjoy full exemption (0% CGT) upon disposal.
Future commodity contracts remain taxed at 5%
The FBR has retained a 5% Capital Gains Tax on gains arising from future commodity contracts entered into by members of the Pakistan Mercantile Exchange (PMEX).
CGT rates for mutual funds, CIS and REITs
The updated provisions also prescribe the Capital Gains Tax to be deducted by mutual funds, Collective Investment Schemes (CIS) and Real Estate Investment Trusts (REITs) upon redemption of securities.
For individuals and Associations of Persons (AOPs):
• Stock funds: 15%
• Other funds: 15%
For companies:
• Stock funds: 15%
• Other funds: 25%
The FBR further clarified that where the dividend income of a stock fund is lower than its capital gains, Capital Gains Tax will continue to be deducted at 15%.
Exemption for long-term holdings
No Capital Gains Tax will be deducted by a mutual fund, Collective Investment Scheme or REIT where redeemed securities were acquired on or before June 30, 2024 and held for more than six years.
The exemption applies exclusively to investments made through mutual funds, collective investment schemes and REIT schemes.
Effective from Tax Year 2027
The revised Capital Gains Tax rates form part of the updated Income Tax Ordinance, 2001, as amended by the Finance Act, 2026, and are applicable for Tax Year 2027, beginning July 1, 2026.
The FBR has advised investors, stockbrokers, mutual funds, investment managers and withholding agents to apply the notified Capital Gains Tax rates in accordance with Section 37A of the Income Tax Ordinance when calculating tax on the disposal or redemption of securities.