Tax Book 2023

Capital Gains Chapter- 12

Where the holding period
exceeds five years but does
not exceed six years

(^) 2.5%
Where the holding period
exceeds six years
(^) 0%
Future commodity contracts
entered into by members of
Pakistan Mercantile
Exchange.

0% 0% 5% 5%

5%

5%

 Securities held for a period upto a maximum of one hundred eighty two days (182) and for a

period upto a maximum of three sixty five days (365) shall be taken as held for six months and

one year respectively.

 Capital gain arising on the disposal of any security shall be computed on the basis of First in First

out (FIFO) inventory accounting method. However, FIFO method shall not apply in respect of

sale of shares purchased on the same trading day. In that case gain or loss shall be computed by

applying the average method.

TAXATION OF GAIN ON DEBT SECURITIES FOR COMPANIES (Part I of first Schedule Proviso to

Division VII)

Capital gain arising from disposal of ‘securities’ shall be treated as a separate block of income. For

rate purposes this income is split into two categories, namely, debt securities and all other securities.

Tax on gain on disposal of debt securities shall be 29 % for companies and for small companies 2 0 %

for the tax year 20 23.

Provided further that a mutual fund or a collective investment scheme or a REIT scheme shall

deduct Capital Gains Tax at the rates as specified below, on redemption of securities as prescribed,

namely:—

Provided further that in case of a stock fund if dividend receipts of the fund are less than capital

gains, the rate of tax deduction shall be 12.5%:

Provided further that no capital gains tax shall be deducted, if the holding period of the security is

more than six years.

COST OF ACQUISITION [Rule 13L(d)]

‘Cost of acquisition’ of any security means the market price of the security which the investor pays or

would have paid to purchase such security. Besides this general rule, the following principles shall

apply while the cost of securities acquired:

Sr. Particulars Cost of acquisition

1. Purchase of shares The market price of the security paid by the investor.


2. Right shares Discounted price at which the right shares are issued.


3. Acquisition through
   bequest or inheritance

Market price of the security at which the deceased person and or

would have paid to purchase such security.

4. Bonus shares Market price of bonus shares immediately following the bonus
   shares which the investor would have paid to purchases such
   shares.


5. Initial public offering (IPO) Actual price paid to the issuer.

Special provision relating to capital gain tax [U/S 100B read with Eight Schedule]

Capital gains on disposal of listed securities and tax thereon, subject to section 37A, shall be

computed, determined, collected and deposited in accordance with the rules laid down in the Eighth

Schedule.

The above provisions shall not apply on the following:-

(a) mutual fund, a modaraba;