Tax Book 2023

Capital Gains Chapter- 12

Where asset is a capital asset is a

security as defined in section 37A(3).

No:

It may be chargeable to tax under

section 37 as given above

Yes:

It is chargeable to tax under separate

block of income

Non applicability of section 37A:

a. Securities held for equal or more than 72

months. and

b. Banking and insurance companies etc.

Treatment of losses:

Loss shall be set off only against the
gain of the person from any other
securities chargeable to tax under this
section and loss shall be carried
forward to the subsequent three tax
years..
Pakistan source & Foreign source capital gain

Geographical source of

capital gain

Received by Taxability

Pakistan source capital

gain [Section 101]:

Gain arising on the disposal

of shares in a resident

company shall be Pakistan-

source income.

Resident / Non-resident

individual

 Taxable [Section 11(5) and (6)]

 Exemptions, tax credits and terms &

conditions of double taxation treaty

agreements, if any shall also be

considered.

Foreign source capital

gain:

Capital gain other than

above.

a. Resident Individual

 Taxable [Section 11(6)]

 Exemptions, tax credits and terms &

conditions of double taxation treaty

agreements, if any shall also be

considered.

b. Short term resident

[For all foreign source

income]

[Section 50]

An individual shall be exempt in respect

of his foreign-source income which is

not brought / received in Pakistan if he

is resident only by reason of his

employment and he is present in

Pakistan for not exceeding 3 years.

c. Returning expatriate

[Citizen of Pakistan coming

back in Pakistan]

[For all foreign source

income]

[Section 51]

If an individual citizen of Pakistan

(returning expatriate) is resident in the

current tax year but was non-resident in

the 4 preceding tax years, his foreign-

source income shall be exempt in

current tax year and in the following tax

year.