Karachi – The Pakistan Stock Brokers Association (PSBA) has proposed a major tax relief for investors, calling for a complete exemption from Capital Gains Tax (CGT) on securities held for more than three years in its budget proposals for 2026–27.
In its recommendations, submitted to policymakers, the association—representing TREC holders and brokers of the Pakistan Stock Exchange (PSX)—urged the government to adopt a progressive CGT structure based on the holding period of securities. Under the proposal, CGT would be reduced to zero for investments held beyond three years, while gains on holdings of up to three years should be taxed at a maximum rate of 10%.
The PSBA argued that high tax rates discourage investment in equities, ultimately impacting capital formation, industrial growth, and government revenue collection by the Federal Board of Revenue (FBR). It stressed that incentivising long-term investment would strengthen the stock market and support sustainable economic growth.
The association also raised concerns over the reapplication of Section 233 of the Income Tax Ordinance, 2001 following the abolition of Section 233A through the Finance Supplementary (Second Amendment) Act, 2019. Currently, a 12% advance tax on brokerage and commission income applies, increasing operational costs for brokers. The PSBA proposed restoring the earlier exemption for stock exchange members to ease the tax burden.
Additionally, the body recommended reducing the corporate tax rate for listed companies—currently around 29% plus super tax—to enhance competitiveness and encourage new listings. It also called for lowering dividend taxation, arguing that existing rates result in multiple layers of taxation on the same income.
The proposals aim to promote documentation, boost investor confidence, and drive long-term growth in Pakistan’s capital markets.