Karachi, March 28, 2025 – The Federal Board of Revenue (FBR) has reported a remarkable 503% surge in capital gain tax (CGT) collection on a year-on-year (YoY) basis for February 2025, reflecting an unprecedented rise in market activity and investor participation.
According to provisional data, the collection of CGT surged to over Rs 3 billion in February 2025, compared to just Rs 500 million recorded in the same month last year. This dramatic increase signals growing capital market transactions and enhanced revenue mobilization efforts by the FBR.
Additionally, during the first eight months (July – February) of the fiscal year 2024-25, the FBR reported an impressive 105% increase in CGT collection. The cumulative revenue from CGT climbed to Rs 18.75 billion, significantly higher than the Rs 9.20 billion collected during the corresponding period of the previous fiscal year.
Stock Market Boom Drives CGT Growth
The massive increase in CGT collection has been attributed to the ongoing bullish trend in the Pakistan Stock Exchange (PSX). Market analysts note that the KSE-100 index, reaching record-high levels, has led to greater trading volumes, directly contributing to increased capital gains tax revenue.
According to FBR sources, the collection of CGT is governed under Section 37A and Section 147 (5B) of the Income Tax Ordinance, 2001, which outlines the taxation framework for securities transactions. The surge in stock market investment activity, coupled with improved enforcement by the FBR, has played a pivotal role in strengthening tax revenue from capital gains.
Regulatory Framework and Exemptions
Under Section 37A, any capital gain arising from the sale of securities after July 1, 2010, is subject to tax at rates specified in the Income Tax Ordinance. However, certain exemptions exist, particularly for banking and insurance companies. Transactions outside registered stock exchanges or those not settled through the National Clearing Company of Pakistan Limited (NCCPL) are also exempt.
Moreover, initial public offerings (IPOs) listed on the stock exchange are exempt from CGT unless they are processed through NCCPL for tax computation.
Future Outlook
With continued bullish trends in the PSX and heightened investor activity, FBR officials anticipate sustained CGT growth in the coming months. The strong performance of capital markets is expected to further bolster government revenue, reinforcing the critical role of CGT in Pakistan’s fiscal structure.