Dividend & Capital Gains Changes in Budget 2026-27
Budget 2026-27 dividend WHT, Section 37A CGT on listed securities, mutual fund AMC rates, REIT distributions, foreign dividend Section 103 treatment.
Worked example: Rs 1,000,000 per month
Annual income Rs 12,000,000 - here's how it would be taxed both ways under Finance Act 2025.
| Taxable income band | Rate | Income in band | Tax in band |
|---|---|---|---|
| Up to Rs 600,000 | 0% | Rs 600,000 | Rs 0 |
| Rs 600,001 - Rs 1,200,000 | 15% | Rs 600,000 | Rs 90,000 |
| Rs 1,200,001 - Rs 1,600,000 | 20% | Rs 400,000 | Rs 80,000 |
| Rs 1,600,001 - Rs 3,200,000 | 30% | Rs 1,600,000 | Rs 480,000 |
| Rs 3,200,001 - Rs 5,600,000 | 40% | Rs 2,400,000 | Rs 960,000 |
| Above Rs 5,600,000 | 45% | Rs 6,400,000 | Rs 2,880,000 |
| Total slab tax | Rs 4,490,000 | ||
Dividend WHT (Section 150) - structure intact
Section 150 dividend withholding tax remains the cleanest line in Pakistani tax: 15% for ATL filers, 30% for non-filers, deducted at source by the CDC or brokerage and treated as final tax for individuals. Mutual fund dividends carry the same rate. IPP (independent power producer) dividends get a preferential 7.5% / 15% split. REIT distributions remain punitively taxed at 25% / 50%. Budget 2026-27 did not announce headline changes to these rates - they are carried forward from FA 2025. Any rate adjustment buried in the Finance Bill 2026 PDF needs cross-check before relying on the carried-forward figures for a large dividend.
Section 37A CGT on listed securities
Pakistan CGT on listed securities follows a three-regime structure under Section 37A. Acquisitions on or after 1 July 2024 sit on a 15% flat rate for filers; non-filers face the higher of 15% or their marginal slab rate. Acquisitions between 1 July 2013 and 30 June 2024 use a holding-period progressive table that walks down from 15% to 0% over six years. Pre-July-2013 acquisitions are exempt. Budget 2026-27 carried this structure forward without headline announcements - but the Finance Bill 2026 should be checked for any new sub-regime or rate tweak that could create a fourth acquisition-date vintage.
Mutual fund redemption gains - AMC deductions
Mutual fund redemption gains are deducted at source by the AMC. Stock funds (equity ≥ 70% of NAV) attract 15% for ATL filers and 30% for non-filers; income, money-market, and hybrid funds attract 25% / 30%. The MUFAP industry body had lobbied against any increase in Budget 2026-27, and the speech did not flag changes to these rates. Your AMC's CGT certificate at year-end is the source of truth for what was actually deducted on each redemption transaction.
Foreign dividends and Section 103
Foreign dividends sit on the Pakistani slab base rather than the Section 150 final-tax regime. Pakistani residents declare them in their return and can claim a Section 103 foreign tax credit for income tax paid abroad on the same income - capped at the Pakistani tax attributable to the foreign income (Pakistani tax × foreign income / total taxable income). Any excess foreign tax is permanently lost - no refund, no carry-forward. Budget 2026-27 did not amend Section 103. Use our Foreign Tax Credit calculator to model your specific position.
Frequently asked questions
Did dividend WHT change in Budget 2026-27?
No headline change announced. Section 150 carries forward: 15% ATL / 30% non-filer for standard dividends, 7.5%/15% for IPPs, 25%/50% for REITs. Verify Finance Bill 2026 text.
What about CGT on PSX shares?
Section 37A regime unchanged so far - 15% flat for filers on post-July-2024 acquisitions, holding-period progressive for older acquisitions, pre-2013 exempt.
Did mutual fund tax rates change?
No headline change. Stock funds: 15%/30% (ATL/non-filer). Income, money-market, hybrid: 25%/30%. AMCs deduct at source.
How are foreign dividends taxed in Pakistan?
On the slab base with a Section 103 foreign tax credit for income tax paid abroad, capped at Pakistani tax attributable to the foreign income. Excess foreign tax is lost.
Where can I model my CGT under the new rates?
Open the Capital Gains on Listed Securities calculator, pick Tax Year 2026-27, and enter your acquisition + disposal dates and gain.