Gold has long been a popular investment in Pakistan, valued for its stability and cultural significance. However, when it comes to selling gold and earning a profit, many are unaware of the tax implications. Recent changes in Pakistan’s tax laws have made it essential to understand how gains from gold sales—known as capital gains—are taxed, especially when combined with other income sources like salary.

In this article, we’ll break down the main themes, key facts, and practical tips about taxing gold profits in Pakistan, based on the latest insights from the Income Tax Ordinance.

Are Gold Gains Taxable in Pakistan?

Yes, profits from selling gold are taxable in Pakistan. According to Section 37, read alongside Section 8 of the Income Tax Ordinance, gold qualifies as a capital asset. This classification means that any gain—or profit—you make from selling gold is subject to income tax.

As one tax expert puts it, “The gold is falling in the definition of capital asset, so it means that tax will be charged on it.” This clears up any misconception that gold might be exempt from taxation.

But here’s where it gets interesting: the tax you pay on gold gains doesn’t just depend on the profit itself—it’s heavily influenced by your other income sources.

How Combining Gold Gains with Other Income Affects Your Tax

One of the most critical points to grasp is how combining gold gains with other income, such as your salary, can drastically increase your tax liability. In the past, capital gains from assets like gold were treated as a separate block of income, meaning they were taxed independently at a fixed rate. However, this approach has shifted.

Now, unless you’re dealing with property (more on that later), gains from gold are added to your total taxable income. This change can push you into a higher tax bracket, especially if your salary doesn’t make up the majority of your earnings.

According to experts, when gold gains are combined with other income, your tax could balloon to “approximately 400 percent” of what you’d pay on the gold profit alone. Let’s explore why this happens.

Salary vs. Business Income Tax Slabs: The 75% Rule

The tax rate you’ll face depends on a key threshold: whether your salary constitutes 75% or more of your total income. Here’s how it works:

• If Salary is 75% or More: Your total income—including gold gains—will be taxed under the salary income tax slabs. These slabs typically offer lower rates, making this a more favorable scenario.
• If Salary is Less Than 75%: If your salary falls below 75% of your total income, the business income tax slabs kick in. These slabs come with higher rates, leading to a significantly larger tax bill.

As one tax professional explains, “The rule or the law says that if your salary income is 75 percent or more, and you add other income to it, then the salary slab rates will apply.

Otherwise, your slab rates will be of business income.” This distinction can make or break your tax planning strategy. Check your tax slabs instantly from our a detailed article Tax Slabs for Salaried Individuals in Pakistan: FY 2024-2025

A Real-World Example: Mr. A’s Tax Dilemma

To illustrate the impact of these rules, let’s look at a practical example involving “Mr. A,” who earns a salary of PKR 1.2 million and makes a PKR 1 million profit from selling gold.

Scenario 1: Gold Gain Only

If Mr. A only had the PKR 1 million gold gain and no other income, he’d pay PKR 60,000 in tax based on the applicable tax slab for that income level. Simple enough, right?

Scenario 2: Salary Only

With just his PKR 1.2 million salary, Mr. A’s tax liability would be PKR 30,000 under the salary income tax slabs. Again, fairly straightforward.

Scenario 3: Combined Income (Salary < 75%)

Now, combine the two: PKR 1.2 million salary + PKR 1 million gold gain = PKR 2.2 million total income. Here, the gold gain makes up about 45% of his income, meaning his salary is less than 75%.

As a result, the business income tax slabs apply. The outcome? A whopping PKR 350,000 in tax—far more than the PKR 90,000 he’d pay if the salary and gold gain were taxed separately.

This example shows how combining income sources can push you into a higher tax bracket, multiplying your tax burden.

Find out your tax with our tool FBR INCOME TAX CALCULATOR 2025

Gold vs. Property: A Key Tax Distinction

Not all assets are treated the same under Pakistan’s tax laws. While gold gains are now part of your normal taxable income, gains from selling property—like plots or houses—remain a separate block of income.

This means property gains are taxed independently and don’t automatically increase your tax slab based on your other earnings.

As one expert notes, “If you have a plot, a house, you are selling it and there is a gain, then it will be a separate block of income… but the gain of other assets has been said that it is not a separate block of income.”

This distinction is crucial for anyone juggling multiple investments.

Why Tax Planning Matters

Given these rules, proactive tax planning is a must. Experts advise, “Plan your tax before the return, manage it so that whatever tax saving you can take within the law, you should take that tax saving.”

By understanding how gold gains interact with your other income, you can explore legal ways to minimize your tax liability—whether that’s timing your gold sales or adjusting your income sources to stay within the salary slab threshold.

Key Takeaways on Gold Taxation in Pakistan

Here’s what you need to know in a nutshell:

1. Gold Gains Are Taxable: Profits from selling gold fall under capital gains and are subject to income tax.
2. Combined Income Can Hurt: Adding gold gains to other income, especially if salary is less than 75%, can trigger higher business income tax rates.
3. Massive Tax Jumps: In some cases, your tax liability could soar (e.g., from PKR 90,000 to PKR 350,000 in the example above).
4. Shift from Separate Blocks: Gold gains are no longer taxed separately, unlike property gains.
5. Plan Ahead: Smart tax management can help you legally reduce your tax burden.

Stay Informed, Save Smart

The taxation of gold gains in Pakistan is no longer a simple matter of paying a fixed rate on your profit. With the shift away from treating these gains as a separate block of income, combining them with other earnings—particularly if your salary isn’t the bulk of your income—can lead to a hefty tax bill.

The good news? By understanding the rules, like the 75% salary threshold and the distinction between gold and property gains, you can make informed decisions to manage your taxes effectively.

Whether you’re a gold investor or just curious about Pakistan’s tax system, staying ahead of these changes is key. So, next time you sell some gold, take a moment to crunch the numbers—it could save you a small fortune.