Budget makers are examining a proposal to impose a lower-rate transaction tax on the buying and selling of shares as part of revenue measures under consideration ahead of the federal budget, market sources said.
According to reports circulating within brokerage circles, the government is considering a 0.1 percent transaction tax on stock market purchases and sales. If approved, the levy would be applied per transaction and would be separate from existing capital gains taxation on listed securities.
Sources said any move to introduce a new transaction-based tax would require approval from the Prime Minister during the upcoming Federal Cabinet meeting scheduled for June 5, where key budget proposals are expected to be reviewed.
Uncertainty surrounding the proposal weighed on sentiment at the Pakistan Stock Exchange on Monday, with investors adopting a cautious approach amid unconfirmed reports of additional taxation on equity trading.
A senior Karachi-based broker told ProPakistani that talk of a transaction tax remains speculative. “At this stage, these are market rumors and not a confirmed policy decision,” the broker said, adding that even small changes in tax structure can impact short-term trading volumes.
At present, investors are subject to capital gains tax on the disposal of listed securities. According to official data, CGT collections from stock market transactions amounted to approximately Rs. 72 billion during the last fiscal year, making it one of the major direct tax contributions from capital markets.
In addition to CGT, market participants already face multiple layers of taxation. These include sales tax on broking services imposed by provincial governments and the Islamabad Capital Territory, a super tax on higher-income entities, withholding tax on dividends, and tax on bonus shares.
Analysts say a transaction tax, even at a relatively low rate, could affect liquidity by increasing the cost of frequent trading. According to market experts, such levies typically have a greater impact on short-term and high-frequency investors than on long-term holders.
However, fiscal planners argue that transaction-based taxes can broaden the revenue base by capturing income from market activity regardless of profitability, especially during periods of high trading volumes.
As budget deliberations continue, investors are closely watching signals from policymakers for clarity. Any formal announcement regarding new stock market taxes is expected only after cabinet-level approval and inclusion in the federal budget documents.
For now, officials have not issued any formal confirmation, leaving markets sensitive to speculation and policy signals ahead of the budget unveiling.
