Govt fixes 15% capital gains tax on securities

June 12, 2023 (MLN): The government has decided to set the capital gains tax at a flat rate of 15% for filers for the sale of securities acquired on or after July 1, 2024, as highlighted in the budget speech published today.

For non-filers, the gain will be taxed at normal rates with a minimum rate of 15% and a maximum rate of 45%.

Furthermore, capital gains tax on income from mutual funds and collective investment schemes is also enhanced from 10% to 15%.

At present, capital gains on the sale of securities are taxed based on the holding period with a maximum rate of 15% and no tax if the holding period exceeds 06 years.

Investors were anticipating a massive rise in CGT by the government to meet its high revenue target, which resulted in the Pakistan Stock Exchange (PSX) experiencing an extreme red zone for seven consecutive sessions.

However, an analysis of past budget changes in CGT and dividend taxes indicates that market reactions to these changes have generally been insignificant.

Moreover, with the flat tax rate set for filers, this is expected to have a positive impact on the market.

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