The Pakistan Stock Brokers Association (PSBA) has officially submitted a high-stakes set of tax relief proposals for the upcoming 2026–27 federal budget, aiming to revitalize the country’s capital markets. Representing the interests of TREC holders and brokerage houses at the Pakistan Stock Exchange, the association has called for a bold shift in the current tax regime. The cornerstone of their recommendation is a complete exemption from Capital Gains Tax (CGT) for any securities held for a period exceeding three years. This move is designed to pivot the market away from speculative short-term trading and toward sustainable, long-term wealth creation.
In its detailed submission to government policymakers, the PSBA advocated for a progressive CGT structure that rewards investor patience. Under the proposed framework, gains on investments held for up to three years would be capped at a maximum tax rate of 10%, while any holding surpassing the three-year mark would attract a zero percent tax rate. The association argued that the current high tax rates act as a significant deterrent for potential investors, which in turn hampers capital formation and stifles industrial growth across the country. By lowering these barriers, the PSBA believes the Federal Board of Revenue could actually see a long-term increase in documentation and overall economic activity.
The brokerage body also highlighted several technical grievances regarding the existing Income Tax Ordinance. A major point of contention is the reapplication of Section 233, which currently imposes a 12% advance tax on brokerage and commission income. The PSBA noted that this tax significantly inflates operational costs for brokers, especially following the abolition of the more favorable Section 233A in 2019. The association has formally requested the restoration of previous exemptions for stock exchange members to ease the financial burden on the firms responsible for maintaining market liquidity and facilitating trade.
Beyond individual investor relief, the PSBA is pushing for a more competitive corporate environment. The association recommended a reduction in the corporate tax rate for listed companies, which currently hovers around 29% when combined with the super tax. Lowering this rate is seen as a vital incentive to encourage new companies to list on the PSX, thereby deepening the market. Furthermore, the proposals include a call to reduce the tax on dividends. The PSBA argued that the current double or triple taxation on the same pool of corporate income—at the company, dividend, and individual levels—is counterproductive and discourages the domestic culture of saving and investing.
These budget recommendations are being framed as essential drivers for investor confidence and market transparency. By aligning Pakistan’s tax structure with international best practices, the PSBA aims to make the local bourse a more attractive destination for both domestic and foreign capital. As the government begins its deliberations for the next fiscal year, the brokerage community remains hopeful that these measures will be integrated into the final Finance Bill to ensure the long-term growth of Pakistan’s capital markets and the broader financial ecosystem.
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