37 Capital Gain Exemptions

(Updated up to: Jun 30, 2022)

Income Tax Ordinance, 2001

Section 79. Non-recognition rules.—
(1) No gain or loss shall be taken to arise on the disposal of an asset
a) between spouses under an agreement to live apart (separately);
b) Transmission of the asset to an executor or beneficiary on the death of a person;
c) Gift of the asset to a relative, as defined in section 85(5);
d) Compulsory acquisition of the asset under any law where the consideration received for the disposal is reinvested by the recipient in an asset of a like kind within one year of the disposal;
e) by a company to its shareholders on liquidation of the company; or
f) by an association of persons to its members on dissolution of the association where the assets are distributed to members in accordance with their interests in the capital of the association.
(2) Sub-section (1) shall not apply where the person acquiring the asset is a non-resident person at the time of the acquisition in respect of disposal of an asset as mentioned in clauses (d), (e) and (f) of sub-section (1)

(3) Where clause (a), (b), (c), (e) or (f) of sub-section (1) applies, the person acquiring the asset shall be treated as —
(a) acquiring an asset of the same character as the person disposing of the asset; and
(b) acquiring the asset for a cost equal to the cost of the asset for the person disposing of the asset at the time of the disposal.


Second Schedule, Part I, Exemption from Total Income

Clause (99A) Profits and gains accruing to a person on sale of immovable property to a REIT Scheme upto thirtieth day of June, 2023.

Clause (103D) Dividend income and long term capital gains of any venture capital fund from investments in zone enterprises as defined in clause (p) of section 2 of the Special Technology Zones Authority Ordinance, 2020 for a period of ten years commencing from issuance of license by the Authority to the zone enterprise.(Finance Act 2021)

Clause 114AA, Any income chargeable under the head “capital gains'“ derived by a resident individual from the sale of constructed residential property:
Provided that exemption under this clause shall only apply, if
• at the time of sale,
• the residential property was being used for the purpose of personal accommodation by the resident individual, his spouse or dependents
• and for which any of the utility bills is issued in the name of such individual;
b) the land area of the property does not exceed 500 square yards (16.5289 marla) in case of a house and 4,000 square feet in case of a flat; and
c) exemption under this clause has not previously been availed by the individual, his spouse or dependents





Clause 114B. Profit and gains accruing to persons mentioned in proviso to section 236C(1) (Dependents of Shaheed or a person dies during service) in respect of first sale of immovable property acquired from or allotted by the Federal Government or Provincial Government or any authority duly certified by the official allotment authority, and the property acquired or allotted is in recognition of services rendered by the Shaheed or the person who dies in service.

Second Schedule, Part III, Reduction in Tax Liability
Clause 9A. The amount of tax payable on income chargeable under the head, “Capital Gains” on disposal of immovable property shall be reduced by 50% on the first sale of immovable property acquired or allotted to ex-servicemen and serving personal of Armed Forces or ex-employees or serving personnel of Federal and Provincial Governments, being original allottees of the immovable property, duly certified by the allotment authority.
Provided that for capital gains arising after completion of three years from the date of acquisition of immovable property the amount of tax payable shall be reduced by 75%.

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Disclaimer: This is general guideline on the subject. No responsibility will be taken for any error or omission