Investing is about returns, but what you keep after taxes is what truly counts. In Pakistan, capital gains tax (CGT) is one of the biggest factors that separates gross profits from net profits.
In 2025, both the Pakistan Stock Exchange (PSX) and the Pakistan Mercantile Exchange (PMEX) have undergone tax changes that directly affect investors’ strategies. The days of slab-based incentives for long-term holdings in PSX are fading, while PMEX is offering some of the most competitive CGT rates in years.
If you’re not fully clear on the difference between these two markets, start with our guide PSX vs PMEX – Difference Between Pakistan’s Two Major Markets.
1. What Is Capital Gains Tax in Pakistan?
Capital gains tax Pakistan applies when you sell an asset for more than you paid for it. Whether it’s a stock, commodity contract, or real estate, the principle is the same:
CGT = Selling Price – Purchase Price (Adjusted)
However, in Pakistan, CGT rates are not universal, they vary depending on:
- Asset type (stocks, commodities, property)
- Holding period
- Purchase date relative to tax policy changes
- Whether you’re a tax filer or non-filer
2. How CGT Has Evolved in Pakistan’s Capital Markets
CGT in Pakistan’s stock market was first formalized to encourage long-term investment and discourage speculative trading. Over the years:
- Early systems rewarded investors with lower rates the longer they held.
- Frequent changes in the Finance Act adjusted slab rates, creating complexity for traders.
- Commodities trading via PMEX historically had lower CGT but was less understood by the average investor.
3. PSX Tax 2025 : Before and After July 1
Before July 1, 2025, Slab-Based Incentives
For securities purchased before July 1, 2025:
| Holding Period | CGT Rate |
| Less than 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% |
| More than 6 years | 0% |
These rates motivated investors to think long-term. For guidance on picking stocks worth holding, see How to Pick Stocks on PSX.
After July 1, 2025 – Flat 15% CGT
Under the new psx tax 2025 rules:
- Any security bought on or after July 1, 2025 is subject to a flat 15% CGT.
- No reduction for long-term holding.
- ATL status matters mainly for compliance, not for rate variation (for filers).
This simplifies calculations but removes the “loyalty reward” for holding quality stocks for years.
4. PMEX Tax Slab: Why 2025 Is a Game Changer
From July 1, 2025, the pmex tax slab is a flat 5% CGT for all commodity contracts—whether you trade gold, crude oil, silver, or agricultural futures.
Key benefits:
- No holding period requirement.
- Predictable tax cost for all trades.
- Lower rate makes high-frequency and short-term trading more viable.
If you’re new to PMEX, our Open PSX/PMEX Account Guide explains how to get started.
5. CGT Impact: Filers vs Non-Filers
- PSX: Filers pay 15%, non-filers can pay up to 45%.
- PMEX: Everyone pays 5%, but being a filer streamlines the process.
The gap between PSX and PMEX rates creates an incentive for traders to diversify into commodities.
6. Case Study: The Same Investor on PSX vs PMEX
Imagine you earn PKR 1,000,000 in capital gains:
- PSX (Post-July 2025, Filer):
CGT = 15% → PKR 150,000 tax → Net: PKR 850,000 - PMEX (2025):
CGT = 5% → PKR 50,000 tax → Net: PKR 950,000
That’s PKR 100,000 more in your pocket, purely from tax efficiency.
7. Why the Government Simplified CGT
- Improve compliance
- Reduce disputes between traders and tax authorities
- Align with IMF reforms and SECP recommendations
- Boost investment by creating clarity
8. Strategic Adjustments for Investors in 2025
For PSX Investors
- If your pre-July 2025 holdings qualify for slab benefits, keep them long enough to maximize savings.
- Post-July holdings: Focus on total return (dividends + price gain) since holding period no longer reduces CGT.
For PMEX Traders
- Use the 5% rate to your advantage for high-turnover strategies.
- Diversify commodities to manage risk, gold and oil don’t always move together.
- Apply proper risk management to avoid over-leveraging.
For more on risk planning, see PSX Risk Management Strategies (many principles apply to PMEX too).
For Mixed Portfolios
- Use PSX for long-term, stable investments.
- Use PMEX for tactical, tax-efficient plays.
9. Risk Factors Beyond CGT
Even a low tax rate can’t save a poor trade. Risks to consider:
- PSX: Political instability, economic downturns, sector-specific slumps.
- PMEX: Commodity price volatility, leverage amplification of losses, global supply-demand shocks.
For a performance-based comparison, read PSX vs PMEX Performance Analysis.
10. Practical Tax Planning Tips
- Track acquisition dates carefully.
- Use tax-efficient order execution, avoid unnecessary churn in PSX if you’re pre-July 2025.
- Use PMEX strategically for shorter cycles and higher turnover.
- Consult a tax advisor if you operate on both platforms.
11. How CGT Shapes the Psychology of Trading
Flat rates tend to encourage more frequent trading since holding longer doesn’t bring tax benefits. This could:
- Increase PSX turnover but reduce holding periods for quality stocks.
- Attract equity traders toward commodities for tax efficiency.
12. The Global Context
Pakistan isn’t alone in simplifying CGT, many emerging markets have moved toward flat rates for ease of administration. The challenge remains balancing revenue needs with encouraging market participation.
Conclusion : Taxes Are Strategy
In 2025, capital gains tax Pakistan rules mean:
- PSX: 15% flat for new purchases, simple, but less rewarding for patience.
- PMEX: 5% flat, potentially game-changing for active traders.
The winners in this new tax environment will be investors who adapt, not just to market movements, but to the tax code that shapes their net returns.
