Professional Group

Long-term capital gains (LTCG) refer to the profits earned from the sale of assets—such as property, stocks, or securities—that have been held for more than a specified period. In Pakistan, these gains are subject to taxation, and the applicable long-term capital gains tax rate depends on the type of asset and the holding duration.

🏠 Capital Gains on Real Estate

Under Section 37(1A) of the Income Tax Ordinance, capital gains arising from the sale of immovable property (e.g., land, plots, buildings) are taxed based on how long the property was held before selling.

Tax Rates on Sale of Property (2025 - FBR Rates):

Holding PeriodTax Rate on Capital GainLess than 1 year15%1 to 2 years10%2 to 3 years7.5%3 to 4 years5%More than 4 years0% (Exempt)

Note: These rates apply to individuals and may vary slightly for companies or developers.

📈 Capital Gains on Stocks & Securities

Capital gains from listed securities and shares (under Section 37A) are also subject to tax based on the holding period and whether or not the investor is on the Active Taxpayers List (ATL).

LTCG on Listed Shares (Tax Year 2025):

Holding PeriodATL StatusTax RateMore than 1 yearATL15%More than 1 yearNon-ATL30%

Unlisted shares or mutual funds may have different rates and are often taxed under separate provisions.

🧾 Exemptions and Special Cases

• Gains from agricultural land are generally exempt.

• Inheritance and gifts (non-sale transfers) are typically not taxed unless sold later.

• Certain gains are exempt under real estate amnesty schemes or special investment zones.

✅ How to Report Capital Gains

Taxpayers must report capital gains in their annual tax return (filed via the FBR’s IRIS portal). Ensure:

• Accurate record-keeping of purchase and sale deeds.

• Deduction of expenses (e.g., agent fees, transfer charges) where allowed.

• Use of valuation tables by FBR or actual transaction value, whichever is higher.

🔎 Conclusion

The long-term capital gains tax rate in Pakistan varies depending on asset type and holding period. For real estate, gains are tax-free after 4 years, while securities attract a flat 15% rate (or higher for non-filers). Staying compliant and keeping detailed records is essential to avoid penalties and ensure proper tax calculation.