Capital Gain on Disposal of Securities

Capital Gain on Disposal of Securities

The Finance Act, 2022 has brought about certain amendments in the Income Tax Ordinance, 2001 (the Ordinance, hereafter). Some significant amendments on Capital Gain on Disposal of Securities are explained hereunder: –

A separate block of taxation of capital gains on disposal of securities is available under the Ordinance. Earlier, flat tax rate of 12.5% was applicable on gain on disposal of securities irrespective of holding period.

Now graduated tax rates have been provided with respect to securities acquired after 1″ day of July, 2022, by substituting the Table in Division VII of Part I of First Schedule as under:

Sr. # Holding Period Rate of Tax for Tax year 2023 and onwards
1 Where the holding period does not exceed one year 15%
2 Where the holding period exceeds one year but does not exceed two years 12.5%
3 Where the holding period exceeds two years but does not exceed three years 10%
4 Where the holding period exceeds three years but does not exceed four years 7.5%
5 Where the holding period exceeds four years but does not exceed five years 5%
6 Where the holding period exceeds five years but does not exceed six years 2.5%
7 Where the holding period exceeds six years 0%
8 Future commodity contracts entered into by members of Pakistan Mercantile Exchange 5%

However, gain on disposal of securities acquired on or before 30th day of June, 2022 will continue to be charged to tax at the earlier flat rate of 12.5% irrespective of the holding period.

For more information on FBR’s new regulations / circulars/ SROs/ amendments in taxation laws in Pakistan please visit https://www.fbr.gov.pk/

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