ISLAMABAD: The federal government has proposed a major increase in taxes for stock market investors who are not listed on the Active Taxpayers List (ATL), as part of its broader effort to boost tax compliance and expand Pakistan’s documented economy.
Under the Finance Bill 2026, non-filer investors could face a 100% increase in tax on capital gains from the sale of securities, following a proposed amendment to the Income Tax Ordinance, 2001.
Non-ATL Investors to Face Double Tax on Capital Gains
The proposed change seeks to remove sub-rule (y) of Rule 10 of the Tenth Schedule of the Income Tax Ordinance. Tax experts say the amendment would effectively double the tax collected under Section 37A, which governs capital gains tax on securities transactions.
The government believes the move will encourage investors to file income tax returns and maintain their status on the Active Taxpayers List to benefit from lower tax rates.
Background of the Amendment
The provision was initially introduced through the Finance Act 2024 after progressive tax rates were imposed on capital gains earned from securities. These rates carried a minimum tax rate of 15% and varied according to applicable income tax slabs.
At the time, sub-rule (y) exempted tax collected under Section 37A from the application of the Tenth Schedule. Later, the Finance Act 2025 narrowed the exemption by limiting it to securities acquired on or after July 1, 2025.
The Finance Bill 2026 now proposes to abolish the exclusion entirely, bringing all relevant securities transactions within the scope of the Tenth Schedule for non-ATL investors.
Government Tightens Pressure on Non-Filers
The proposal is part of a wider tax enforcement strategy introduced in the federal budget for 2026-27. The government has been steadily increasing the cost of remaining outside the documented tax system through higher withholding taxes, stricter compliance measures, and increased penalties for non-filers.
Officials argue that creating a larger tax gap between active taxpayers and non-filers will encourage voluntary compliance and strengthen revenue collection.
Impact on Pakistan Stock Market Investors
If approved by Parliament, the amendment could significantly affect individuals and entities investing in the Pakistan stock market without maintaining active taxpayer status.
Tax consultants advise investors to ensure they remain on the ATL to avoid higher tax liabilities on capital gains. Active taxpayers will continue to enjoy preferential tax treatment compared to non-filers, preserving the government’s policy of rewarding compliant taxpayers.
The proposed measure further reinforces the government’s push to expand the tax base while increasing the financial cost of investing outside Pakistan’s documented tax framework.
