Tax on Investments in Pakistan

Day 14: Tax on Investments In Pakistan (Stocks, Mutual Funds, etc.)

How to report profits/losses from investment instruments in Pakistan

Investing in the stock market and mutual funds can be rewarding—but it’s essential to understand the tax implications to ensure proper reporting and compliance with FBR. In Pakistan, capital gains from the sale of listed securities and returns on mutual funds are subject to specific tax treatments. Let’s break it down.

What is Capital Gains Tax (CGT)?

Capital Gains Tax (CGT) is levied on the profit earned from the sale of securities like stocks, mutual funds, and other investment instruments. In Pakistan, CGT is collected by the National Clearing Company of Pakistan Limited (NCCPL) for listed securities.

Tax Rates on Investments

As of the latest updates:

Listed Securities (sold within the same year): Taxed between 15% to 30% depending on holding period and your tax filing status (filer vs non-filer).
Mutual Fund Income: Dividend income is usually taxed at a fixed rate of 15%, but capital gains are also taxed as per standard CGT rules.
Government Securities (T-bills, PIBs): Subject to withholding tax which is adjustable while filing returns.

Always check the latest FBR Finance Act or consult a tax consultant for updated rates.

Exemptions & Special Cases

Capital losses can be carried forward and adjusted against future capital gains.
Long-term investments (holding period > 2 years) may have lower tax rates.
Dividends are taxed separately, not under CGT.