Does capital gains tax on shares depend on how long I held them or when I bought them?

For shares sold in tax year 2027, the capital gains tax rate depends first on when the shares were bought, and for one group of purchases also on how long they were held. The rates are in Division VII of Part I of the First Schedule to the Income Tax Ordinance, 2001, as amended to 30 June 2026, and are charged through section 37A.

What does the law say?

Section 37A(1) charges capital gain on disposal of securities “at the rates specified in Division VII of Part I of the First Schedule”. Section 37A(2) says the holding period “shall be reckoned from the date of acquisition … to the date of disposal”.

The Division VII table, substituted by the Finance Act, 2024, has two rate columns. Column (3) applies to securities acquired between 1 July 2022 and 30 June 2024, both dates inclusive. Column (4) applies to securities acquired on or after 1 July 2024. A proviso then deals with older purchases.

What are the rates for each purchase date?

Date of acquisition	Rate on the gain
Before 1 July 2013	0% (first proviso, clause (ii))
1 July 2013 to 30 June 2022	12.5% (first proviso, clause (i))
1 July 2022 to 30 June 2024	By holding period, see next table (column 3)
On or after 1 July 2024	15% if on the Active Taxpayers’ List on the dates of acquisition and disposal; otherwise Division I or II rates (column 4)

For securities acquired between 1 July 2022 and 30 June 2024, column (3) sets:

S. No.	Holding period	Rate
1	Does not exceed one year	15%
2	Exceeds one year but does not exceed two years	12.5%
3	Exceeds two years but does not exceed three years	10%
4	Exceeds three years but does not exceed four years	7.5%
5	Exceeds four years but does not exceed five years	5%
6	Exceeds five years but does not exceed six years	2.5%
7	Exceeds six years	0%

S. No. 8, future commodity contracts entered into by members of Pakistan Mercantile Exchange, carries 5% in both columns, and the first proviso’s 12.5% and 0% rules do not apply to it.

How does it work in practice?

You need two dates for each lot of shares: the acquisition date and the disposal date. The acquisition date places the lot in one of the four rows of the first table. Only for the 1 July 2022 to 30 June 2024 group does the gap between the dates change the rate.

If you bought the same company’s shares on different dates, each lot can fall into a different row. Column (4) does not reduce with time, so a lot bought in August 2024 attracts the same rate whether it is sold after one month or five years.

Two further provisos matter for some investors. The rate for companies on debt securities is the Division II rate, not the table rate. Mutual funds, collective investment schemes and REIT schemes deduct tax on redemption at separate rates set in another proviso, covered on the mutual fund redemption page.

Worked example (illustrative figures)

Sana, a doctor in Islamabad, is on the Active Taxpayers’ List throughout. She sells three lots on 15 October 2026, each giving a gain of Rs. 160,000 (bought for Rs. 200,000, sold for Rs. 360,000).

Lot A, bought 1 September 2022. The holding period to 15 October 2026 is just over four years, so it “exceeds four years but does not exceed five years”: S. No. 5, 5%.

• Rs. 160,000 x 5% = Rs. 8,000.

Lot B, bought 1 August 2024. Column (4) applies, 15%.

• Rs. 160,000 x 15% = Rs. 24,000.

Lot C, bought 20 March 2015. Clause (i) of the first proviso applies, 12.5%.

• Rs. 160,000 x 12.5% = Rs. 20,000.

Had any lot been bought before 1 July 2013, its gain would carry 0%.

What if a sale falls exactly on an anniversary?

The bands use “does not exceed” and “exceeds”. A holding of exactly one year “does not exceed one year” and stays at 15%. Section 37A(2) says only that the period runs from acquisition to disposal. It does not say how to count days or treat settlement dates, and this page does not settle that. The Eighth Schedule computation by NCCPL is where such points are applied in practice.

Common mistakes

• Assuming all long-held shares are tax free. The 0% after six years is only in column (3), for purchases from 1 July 2022 to 30 June 2024. Shares bought from 1 July 2013 to 30 June 2022 stay at 12.5% however long they are held.
• Expecting a holding-period discount on post-July 2024 purchases. Column (4) has none.
• Using the sale date alone. The purchase date decides which row or column applies.
• Treating each lot the same. Different purchase dates can carry different rates in the same sale.

What to check in the official text

Read section 37A and Division VII of Part I of the First Schedule in the official PDF, including all provisos after the table. The table in the consolidated PDF is printed in narrow columns, so check which column each rate sits in. Keep your own purchase records for each lot, since the acquisition date drives the rate.