What is Capital Gains Tax (CGT)?
Capital gains tax is levied on the profit you make when you sell a capital asset — typically immovable property or listed securities (PSX shares). It is governed by Section 37 and Section 37A of Pakistan's Income Tax Ordinance 2001. The gain is simply sale price minus acquisition cost; if you sell for less than you paid, there is no CGT.
CGT is a separate head of income — it is not added to your salary or business income for rate purposes (except for non-filers under the new post-July 2024 regime, where the gain is stacked on top of other income to find your marginal slab rate).
📅 The critical date is 1 July 2024. The Finance Act 2024 introduced a flat-rate regime for all assets acquired on or after that date. Assets acquired on or before 30 June 2024 continue to follow the old holding-period tables.
Part 1: Capital Gains Tax on Property
New Regime — Property Acquired On/After 1 July 2024
For any immovable property (plot, house, flat, commercial unit) acquired on or after 1 July 2024, holding period no longer matters. The rate is:
| Filer Status | CGT Rate | Notes |
|---|---|---|
| Active Filer (ATL) | 15% flat | Same rate regardless of how long you held the property |
| Non-Filer | Slab rate, min 15% | Gain stacked on other income; your FBR marginal rate applies, 15% floor |
Old Regime — Property Acquired On/Before 30 June 2024
For property acquired before the 2024 cut-off, rates depend on property type and holding period (years between acquisition date and disposal date).
Open Plot
| Holding Period | CGT Rate |
|---|---|
| Up to 1 year | 15% |
| 1–2 years | 12.5% |
| 2–3 years | 10% |
| 3–4 years | 7.5% |
| 4–5 years | 5% |
| 5–6 years | 2.5% |
| Over 6 years | 0% (exempt) |
House / Constructed Property
| Holding Period | CGT Rate |
|---|---|
| Up to 1 year | 15% |
| 1–2 years | 10% |
| 2–3 years | 7.5% |
| 3–4 years | 5% |
| Over 4 years | 0% (exempt) |
Flat / Apartment
| Holding Period | CGT Rate |
|---|---|
| Up to 1 year | 15% |
| 1–2 years | 7.5% |
| Over 2 years | 0% (exempt) |
💡 Tip: If you bought property before July 2024 and are approaching a holding-period threshold (e.g., year 6 on a plot), it may be worth timing your sale to hit the 0% bracket. Use the CGT Calculator to check exactly how many days remain before the next rate drops.
Part 2: Capital Gains Tax on Shares (PSX Securities)
Listed securities on the Pakistan Stock Exchange (PSX) have had four distinct CGT regimes over the years, determined entirely by when the shares were acquired.
| Acquisition Date | CGT Rate | Holding Period? |
|---|---|---|
| Before 1 Jul 2013 | 0% (exempt) | Irrelevant |
| 1 Jul 2013 – 30 Jun 2022 | 12.5% flat | Irrelevant |
| 1 Jul 2022 – 30 Jun 2024 | 0%–15% (sliding scale) | Yes — rate reduces with holding period (see table below) |
| On/after 1 Jul 2024 | 15% (filer) / slab rate min 15% (non-filer) | No — flat regardless of holding period |
Securities Acquired 1 Jul 2022 – 30 Jun 2024 (Holding-Period Table)
| Holding Period | CGT Rate |
|---|---|
| Up to 1 year | 15% |
| 1–2 years | 12.5% |
| 2–3 years | 10% |
| 3–4 years | 7.5% |
| 4–5 years | 5% |
| 5–6 years | 2.5% |
| Over 6 years | 0% (exempt) |
⚠️ Note on mutual fund units: Mutual fund units (open-end funds) have a separate rate schedule under the Income Tax Ordinance and are not covered by the tables above. Consult your fund's KIBOR-linked CGT rates or a tax advisor for mutual fund disposals.
Filer vs Non-Filer: How Much More Do Non-Filers Pay?
For assets acquired before 1 July 2024, the same holding-period rate generally applies to both filers and non-filers. The divergence is significant only for assets acquired under the new regime:
| Annual Taxable Income (incl. gain) | Filer CGT Rate | Non-Filer CGT Rate | Extra Cost |
|---|---|---|---|
| Any amount (gain only, no other income) | 15% | 15% (min floor) | Rs 0 |
| Rs 2.2M–3.2M total income | 15% | 20% | +5 ppts |
| Rs 3.2M–4.1M total income | 15% | 25% | +10 ppts |
| Rs 4.1M–5.6M total income | 15% | 29% | +14 ppts |
| Above Rs 7M total income | 15% | 35% | +20 ppts |
For a non-filer earning Rs 300,000/month who sells a property acquired after July 2024 with a Rs 3 million gain, the CGT could be Rs 750,000 (25%) instead of Rs 450,000 (15%) — a Rs 300,000 penalty for not filing. Becoming an active filer costs nothing and is done in minutes on Iris.
Inherited Property — Special Rules
If you inherited property rather than purchased it, two things change:
- Cost basis: Your acquisition cost is the fair market value of the property on the date the original owner died — not what they paid for it decades ago. This prevents tax on inherited gains the heir never actually made.
- Acquisition date: For determining which regime applies (old vs new), the relevant date is when you inherited the property, not when the deceased originally purchased it.
This was confirmed under Budget 2026-27 rules. Always obtain a valuation certificate or DC rate document evidencing the fair market value at the date of inheritance to support your cost basis at the time of filing.
CGT vs Advance Withholding Tax — Two Different Things
Many property sellers confuse CGT with the advance taxes deducted at the time of registration. These are two separate mechanisms:
| Capital Gains Tax (Section 37) | Advance Withholding (236C / 236K) | |
|---|---|---|
| When paid | Annual income tax return (Sep deadline) | At property registration / transfer |
| Who pays | Seller (computed on actual gain) | Seller (236C) and Buyer (236K) |
| Rate (filer, 2026-27) | 15% on gain | 2.75% seller / 1.25% buyer (on sale price) |
| Is it adjustable? | N/A | Yes — deducted from your final CGT liability when filing |
In practice, the 2.75% advance tax (236C) collected at registration often covers a significant portion of the 15% CGT on the gain — the amount depends on the ratio of gain to total sale price. Any excess advance tax paid becomes a refund.
Worked Examples
Example 1: Plot bought in 2020, sold in 2025 (old regime, filer)
- Acquisition date: March 2020 → pre-July 2024 cut-off → old regime
- Disposal date: March 2025 → holding period: 5 years
- Acquisition cost: Rs 4,000,000
- Sale price: Rs 9,000,000
- Gain: Rs 5,000,000
- Rate (open plot, 5–6 years): 2.5%
- CGT = Rs 125,000
Example 2: Same plot but sold after holding 6 years (old regime, filer)
- Same plot, sold March 2026 → holding period: 6 years
- Rate (open plot, over 6 years): 0%
- CGT = Rs 0 — completely exempt
Example 3: House bought in 2025, sold in 2026 (new regime, filer)
- Acquisition date: January 2025 → post-July 2024 → new flat regime
- Holding period: 14 months (irrelevant under new regime)
- Acquisition cost: Rs 15,000,000
- Sale price: Rs 22,000,000
- Gain: Rs 7,000,000
- Rate (filer, new regime): 15% flat
- CGT = Rs 1,050,000
Example 4: PSX shares bought in 2021, sold in 2026
- Acquisition date: February 2021 → regime: 1 Jul 2022 cut-off not yet reached at acquisition, but wait — acquired Feb 2021 falls in the 1 Jul 2013–30 Jun 2022 regime → flat 12.5%
- Holding period: irrelevant for this regime
- Acquisition cost: Rs 500,000
- Sale price: Rs 1,200,000
- Gain: Rs 700,000
- CGT = Rs 87,500 (12.5%)
Example 5: PSX shares bought in 2023, sold in 2026 (filer)
- Acquisition date: June 2023 → regime: 1 Jul 2022–30 Jun 2024 → holding-period table
- Disposal date: June 2026 → holding period: 3 years
- Rate (3–4 year bracket): 7.5%
- Gain: Rs 300,000
- CGT = Rs 22,500
🧮 Skip the arithmetic. Enter your dates and costs into the Capital Gains Tax Calculator — it automatically detects which regime applies, calculates the gain, applies the correct rate, and generates a PDF summary.
How to Report CGT When Filing Your Return
- Log in to Iris (iris.fbr.gov.pk) using your CNIC.
- Go to Declaration → 114(I) — Return of Income for the relevant tax year (1 Jul–30 Jun).
- Under the Capital Gains section, declare each disposal separately — date of acquisition, date of disposal, acquisition cost, sale proceeds, and computed gain.
- Enter any advance withholding tax (236C) already deducted at property registration as an adjustable credit.
- The system computes your net CGT liability. Pay any balance due via online banking or a designated bank before the 30 September deadline.
Keep the sale deed (bayanama), registered transfer documents, and bank transfer records as supporting documentation — FBR can request these during audit.
Key Points to Remember
- Cut-off is 1 July 2024 — the acquisition date, not the sale date, determines which regime applies.
- Gains are not inflation-indexed. Even if PKR has lost 40% of its value since you bought the plot, you pay CGT on the full nominal gain.
- Capital losses can offset capital gains from the same category in the same tax year but cannot be carried forward.
- Non-filer penalty is real. Under the new regime, non-filers in higher income brackets can pay more than double the CGT of a filer on the same gain.
- Withholding tax is adjustable. The 236C advance tax collected at registration is credited against your final CGT bill — it is not an extra cost on top of CGT.
Frequently Asked Questions
What is the CGT rate on property bought before July 2024?
It depends on property type and how long you held it. Open plots go from 15% (under 1 year) to 0% after 6 years. Constructed houses from 15% to 0% after 4 years. Flats from 15% to 0% after just 2 years. See the full tables above.
If I sell property at a loss, do I owe CGT?
No. CGT applies only on a positive gain (sale price > acquisition cost). A capital loss can be set off against capital gains from other disposals in the same tax year but cannot be carried forward.
Does CGT apply to inherited property?
Yes, if you subsequently sell inherited property you may owe CGT. The cost basis is the fair market value at the date of inheritance, and the acquisition date for regime purposes is the date you inherited it.
What is the CGT on PSX shares bought before 2013?
Fully exempt — no CGT is payable on shares acquired before 1 July 2013, regardless of how much profit you made or when you sold them.
Is CGT payable on commercial property?
Yes. Commercial property (shops, offices, warehouses) follows the same rules as residential property. If acquired before July 2024 it uses the old holding-period table; if acquired after, the flat 15% new regime applies.
Can I reduce CGT by deducting renovation costs?
Under current FBR rules, the acquisition cost for CGT purposes is generally the original purchase price. Capital improvements (renovation, construction additions) are not routinely deductible against the CGT gain unless specifically documented and accepted by FBR. Consult a tax advisor if you have significant improvement costs.