Glossary · Investing Basics
Capital Gain
The profit earned when a security is sold for more than its purchase price. In Pakistan, capital gains tax applies to gains from the sale of listed securities, with rates depending on the holding period.
01—What is Capital Gain?
The definition — and what it means in practice.
A capital gain is the profit you make when you sell a security for more than you paid for it. It is usually measured as the sale proceeds minus the purchase cost, and it can be calculated per share or for your whole holding. If you sell for less than your cost, that is a capital loss. In Pakistan, capital gains tax can apply to gains on listed securities, with rates linked to holding period.
Capital gains matter because they are a core part of your overall return, alongside dividends and other cash flows. They also affect how you plan exits, rebalancing, and risk controls, since a gain is only “realised” when you sell. In practice, your net gain depends on transaction costs such as brokerage commission and on tax treatment, so the amount you keep can differ from the headline price move.
If you buy a share at Rs 100 and sell at Rs 130, your capital gain is Rs 30 (before brokerage, taxes, and other charges).
Capital Gain = Selling Price − Purchase Price
Use per-share prices, or multiply by number of shares; consider charges and taxes separately.
- A capital gain is profit realised when you sell above your purchase price.
- Gains are not locked in until you sell; before that, they are unrealised.
- Net gains can be reduced by brokerage commission and other charges.
- In Pakistan, capital gains tax on listed shares depends on holding period and filer status.
02—How capital gain works on the PSX
The Pakistan-specific rules, conventions, and numbers.
On the Pakistan Stock Exchange (PSX), capital gains are typically realised when your sale trade settles and the shares move electronically through the Central Depository Company (CDC) system. Trades clear through the National Clearing Company of Pakistan Limited (NCCPL), and settlement is T+1 (one business day). In day-to-day investing, the “gain” you see is tied to your buy and sell execution prices, not just a company’s fundamentals.
For Pakistani investors, capital gains are also a tax concept. Capital gains tax can apply to gains on the sale of listed shares, and the applicable treatment can depend on how long you held the position and whether you are a filer; the details can change with Finance Acts. Practically, this means your after-tax outcome may differ even when two investors have the same pre-tax profit on a PSX trade.
03—Common misconceptions
Where investors most often get this wrong.
My capital gain is the same as the stock’s percentage increase.
Your gain depends on your own purchase and sale prices (and quantity), plus charges. The stock’s move is only a reference.
I have a capital gain as soon as the price goes up.
That is an unrealised gain. It becomes a realised capital gain only when you sell the security.
Capital gains tax is always the same rate in Pakistan.
For listed shares, the tax treatment can vary by holding period and filer status, and can change with Finance Acts.
04—Using capital gain on BSL
Where this term shows up across the platform — with live data.
- Track price moves and potential gains across listed shares on Stocks.
- Compare candidates and filter by metrics using the Stock Screener.
- Review market movers that often drive realised gains on Market.
- Learn how related taxes work in Capital Gains Tax.
05—Frequently asked questions
What investors ask about capital gain on the PSX.
Frequently Asked Questions
A capital gain on the PSX is the profit earned when you sell a listed security for more than your purchase price. It is realised only when you sell, and the net amount can be affected by brokerage commission, other charges, and applicable taxes.
Unrealised gain is the paper profit on a holding you still own, based on the current market price versus your cost. Realised gain happens when you sell and lock in the profit. Tax treatment is generally tied to realised gains on sale, not day-to-day price changes.
Capital gains tax can apply to gains from the sale of listed securities in Pakistan. The treatment can depend on the holding period and filer status, and it may change through Finance Acts. Exact rates are set by tax rules rather than the exchange.
No. Dividends are cash payments declared by a company, while capital gains come from selling at a higher price than your cost. In Pakistan, cash dividends can have withholding tax, while capital gains may be taxed under capital gains tax rules.
Transaction costs such as brokerage commission reduce your net profit. Even if your selling price is higher than your purchase price, the amount you keep after charges and any applicable tax can be smaller than the simple price difference.
06—Related terms
Keep building the picture.
A tax levied on profits from the sale of securities. In Pakistan, CGT on listed securities is calculated based on the length of time the shares were held. For instance, shorter holding periods attract higher rates. Filers and non-filers are taxed at different rates.
A portion of a company's profits distributed to shareholders. Can be in the form of cash, bonus shares, or a combination of both.
The fee charged by a broker for executing a trade on behalf of a client. On the PSX, commission rates typically range between 0.1% and 0.5% per transaction.
The process of completing a trade by transferring shares to the buyer and cash to the seller. The PSX has moved toward a T+1 settlement cycle, meaning most trades are finalised one business day after the trade date.
The current standard settlement cycle on the PSX, where trades are finalised one business day after the transaction date. The shift from T+2 to T+1 was implemented to reduce counterparty risk and improve market efficiency.
A tax deducted at source on dividends and other income in Pakistan. For tax filers, the withholding tax on dividends from listed companies is currently 15%. Non-filers face a higher rate.
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