New budget likely to impose capital gains tax on crypto trading

A major decision to bring cryptocurrency transactions under the tax net is expected in the new budget. According to sources, capital gains tax of 10 to 30 percent may be imposed on profits earned from crypto trading.

The government is seriously considering including the crypto sector in the tax net on the suggestions of the International Monetary Fund (IMF). The IMF has demanded taxation of profits earned from all digital businesses.

Sources say that a new clause (37-C) may be added to Section 37 of the Income Tax Act 2001 to bring capital gains earned from crypto transactions under the ambit of tax.

About 9 million people are using cryptocurrency in Pakistan. The government expects that taxing profits earned from crypto trading will generate additional revenue of billions of rupees.

In this regard, the Pakistan Virtual Asset Regulatory Authority was also instructed to propose tax measures and a special committee was formed. A few months ago, the State Bank had also decided to legalize virtual assets and introduce digital currency.

However, the digital currency can only be used for buying and selling virtual assets and cannot be used for purchasing ordinary goods and services. A legal framework has also been prepared for cryptocurrency.