The federal government is expected to bring in new legislation through the Finance Bill 2026 to tax and regulate cryptocurrency transactions in the upcoming budget for 2026-27, according to official sources.
Officials familiar with the matter said the move is aimed at bringing digital currency activity into the formal tax system. However, they noted that designing a workable framework remains one of the most difficult policy challenges currently facing the government.
The Tax Policy Unit of the Finance Ministry, along with the Federal Board of Revenue (FBR), is working on a draft structure for taxing crypto-related income. The plan is to gradually align digital assets with Pakistan’s broader financial and taxation system while ensuring proper documentation of transactions.
A major concern for policymakers is how to deal with cryptocurrency holdings and profits generated abroad. Authorities are also reviewing different proposals to ensure that while investment is encouraged, the system is not misused for undeclared wealth or illegal flows. Officials said striking this balance has made the process more complicated than expected.
The FBR is also considering expanding the scope of existing tax laws, including provisions under Section 37 of the Income Tax Ordinance 2001, so that capital gains from digital currencies can be brought into the tax net. Tax experts believe this could become the most practical starting point for regulation, as trading gains are easier to track compared to other forms of crypto activity.
According to a previous report cited by the Federal Tax Ombudsman, there are around 560 million cryptocurrency users globally, with nearly nine million in Pakistan. The report also noted that Pakistan ranks among the top adopters of digital currencies, reflecting rising interest from both individual and institutional investors.
Officials and experts agree that while the proposed legal framework could help widen the tax base, it also raises complex questions about enforcement, valuation and compliance. They warn that poor design of the system could either discourage innovation or push activity further into unregulated channels.
Read next: Budget 2026-27: are smartphone prices reducing in Pakistan
