Capital Gains Tax

Lodhi, K. M. & Shah, S. M. A. (2013). Impact of Capital Gains Tax on Stock Investment in Pakistan. Papers/I73.pdf

This study analyzes the impact of capital gains tax on stocks investment in Pakistan. The study defines a capital gains tax clearly and finds that levying a Capital Gains Tax results in lower volume of stock investment and lesser growth in assets/securities whereas the revenues have also declined as further investments have declined due to the fears of documentation of small investors by the tax authorities. The study highlights the pros and cons of levying CGT. Problems with the tax system of Pakistan are also identified. The paper is based on both qualitative and quantitative research methods to yield more appropriate and effective outcome. The impact of CGT tax policy reforms on Stock market growth sector has been selected for this study to understand the impact of CGT on trade in Stock market shares investment. The analysis period was from 2005-06 and 2009-10. The data was taken from statistics department of the State Bank of Pakistan, FBR Year book, Economic Surveys of Pakistan, Annual Plan, Pakistan Income Tax Ordinance, the annual reports of Islamabad Stock Exchange (ISE) and Karachi Stock Exchange (KSE) operating in Pakistan.